If you’re thinking about refinancing from a subprime or ARM to an FHA loan you’d better think fast. FHA loan limits, raised temporarily by the 2008 economic stimulus package, will return to lower amounts in 2009. A HUD letter to lenders explains how the maximum limit of $729,750 in high-cost areas will drop to $625,500. And limits for other locales will drop to 115% of the median sales price but no lower than $271,050. Falling property values have decreased the maximum loan limit in many counties.
HUD has compiled this list of 2009 FHA loan limits but reading it is a challenge. Click to open the file, then use the “find on this page” function (in Internet Explorer) to find your area. The loan limit number starts on the 11th character of the widest column of numbers and codes. For example, Reno / Sparks, NV has a 2008 limit of $403,750. But in 2009 it changes to $325,450, a drop of over $75,000!
So if your home is in the spendier part of town or if you live in a high-priced area like San Francisco, consider getting your your refinance done before the end of the year. And keep in mind that FHA will grant you the higher limit only if you lock your mortgage rate by December 10th and close it by year end.
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