In 2008, the Housing and Economic Recovery Act was passed and it allowed conventional and FHA loans to increase their maximum mortgage. In certain areas, conventional loans were allowed up to $729,000 but in Minnesota, the maximum stayed at $417,000. FHA loans were allowed to increase to $365,000 in the Minneapolis/St Paul metro area.
That bill is going to expire on October 1, 2011 and the maximum mortgage for FHA will be dropping back to $318,550 for the eleven county metro area. For those buying outside the metro area, the maximum mortgage is $271,050.
If you are currently looking at an FHA mortgage and you are approved for more than $318,550, your loan will have to close prior to October 1st. Some investors are requiring you to close sooner than that as they want to have time to purchase the loans from the mortgage companies.
There is a chance that Congress will extend this but until they do, expect this change. If you are currently waiting for a short sale approval and it would be affected by this change, you want to let your real estate agent know about it. If you have an accepted purchase agreement, make sure you close by September 30, if not sooner. We are requiring buyers to close by September 26, 2011.
If you are thinking about refinancing and using FHA for your mortgage, make sure you close and disburse your loan by September 30 - or sooner. For those that currently have FHA mortgages, you will have to refinance by October 1st in order to use FHA financing.
If you are looking at homes, make sure you are aware of this change. If you were hoping to buy something over $318,550, make sure you give yourself time to close. Once September 1st comes, it will be difficult to get a purchase agreement written and closed by the deadlines.
