Categorized | Residential

Luxury Home Owners Face Higher Borrowing Costs in the United States

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The United States government has opted to remove all support from the luxury residential real estate market. The increased limits on the size of the loan that the government will insure expired at the beginning of October, signaling that the United States government was looking to allow the insurance of high-end mortgages to be privatized.

Since the real estate crash in 2008, the United States government raised its mortgage loan insurance limit to over seven hundred and twenty thousand dollars. However, with the expiration of the raised limits, the government now only insurances mortgage loans as high as six hundred and twenty five thousand dollars.

The one hundred thousand dollar reduction is not expected to impact the majority of mortgages. In fact, data from experts indicate that only two percent of the residential real estate market will be affected. At the same time, the experts fear that the change in policy could further cripple an already struggling housing market.

The change in limits will force those looking to secure a larger mortgage to receive a jumbo loan with a higher interest rate. Furthermore, there is the belief that these recent changes in policy will prevent more people from being approved for a mortgage loan. Potential homeowners already need to have excellent credit to secure a home loan that fits under government insurance guidelines. For potential homeowners interested in loans that must now be insured privately, it is essential that they have absolutely pristine credit if they hope to be approved.

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About Ella Jourgeson

Ella was recently an intern who checked all the articles for grammatical and spelling errors. She is now an all purpose writer filling in wherever we need help.

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