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What’s New in the New Year?

January 6, 2022

Every year, throughout the year, the lending industry sees various changes in policies, guidelines, norms, and loan limits. In 2022, there are quite a few worth knowing:

• New Loan Limits: In 2022, all major loan types saw significant increases in lending limits. Conforming loan amounts, for example, now go up to $647,200 for a 1 unit property in all counties, with even higher limits available in high-cost areas. FHA limits are now up to $522,100 in Larimer County, and $483,000 for Weld County. Traditionally, when loan limits increase, it allows more buyers to qualify for higher-priced homes (as Jumbo mortgages generally come with tighter guidelines, and in some cases, higher rates).

• Rates appear to be on the rise: In December, the Federal Reserve announced that it would accelerate their curtailment of monthly bond purchases, originally put in place to keep mortgage and treasury rates low throughout the pandemic. This, combined with inevitable “hikes” in the fed funds rate, are expected to put upward pressure on rates for the long term. And while this is expected to be slow and steady, for now, it can make a significant difference in a homebuyer’s true cost of ownership.

For example, the average $500k home with 10% down would cost an extra $126/mo, if rates increase by 0.5%.

• Many business owners are expected to return to the buyer pool: For countless self-employed individuals, 2020 was touch-and-go, and many small businesses survived only because of PPP grants and EIDL loans. Unfortunately, when those buyers tried to qualify for financing with 2020 tax returns, their qualifying income was insufficient, forcing them to wait until 2021 returns were completed. Come February, many of those business owners are expected to file early, in an attempt to take advantage of low rates and current home prices.

Additional changes are also being seen with expanding underwriting guidelines, new tax codes, and many other developments that are sure to make 2022 a very interesting year. If anything, it will keep us all on our toes… Happy New Year!
7200+ Transactions & $1.85B personally originated since 2001.

Justin Crowley
Sr. Mortgage Loan Originator NMLS # 378544
First Western Trust – NMLS# 477166 – Equal Housing Lender

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