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What Do Lower FHA Loan Limits Mean For You?

Economic stimulus legislation that raised the limit for an FHA mortgage loan is set to expire October 1st of this year, lowering the most you can borrow under FHA guidelines to $625,500. Should you care about this change, especially if you’re thinking about mortgage refinance? According to a recent George Washington University study this change will have next to no effect on an already flailing economy. You can read more about on TheTruthAboutMortgage.com’s website:

A new study from George Washington University claims reduced FHA loan limits will do little to shake the already rattled mortgage market. The authors noted that once FHA loan limits are reduced in October of this year, most of the FHA’s target population, which includes first-time buyers and low-to-moderate income borrowers, will be served.


I’ve never been a fan of FHA mortgage loans for the simple reason that you’re forced to pay for Private Mortgage Insurance (PMI). This insurance is a colossal waste of money and does nothing for you but drive up your mortgage payments. PMI only protects the lender from certain types of losses if you foreclose; because FHA home loans require you to waste your money it’s better to seek financing elsewhere if you can.

I am under the opinion that FHA home loans should be the mortgage of last resort; however, VA home loans are an excellent deal and do not require that you buy private mortgage insurance. Many homeowners overlook their VA mortgage loan eligibility. If you’re currently overpaying on a FHA home loan and served in the United States military you should seriously consider mortgage refinance with a VA home loan.

Common mortgage mistakes many homeowners make when it comes to government-backed mortgages is assuming that the loan originator and lender will be honest about fees. Overpaying the loan origination fee and closing costs, especially if you’re closing on a mortgage refinance loan can cost you thousands of dollars and defer any benefit you’ll get by lowering your monthly payment.

You can learn more about refinancing your home without unnecessary fees and markup by checking out my free Underground mortgage videos.

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