In January, loan limits for popular mortgages will drop. The Federal Housing Finance Administration currently allows mortgages backed by Fannie Mae and Freddie Mac to be as high as $417,000 in most places and up to $625,000 in higher-priced places like New York City. But that number is going to go down.
Also in January, there will be new rules by the Consumer Financial Protection Bureau going into effect. These rules will limit the types of mortgages available, and make those available more expensive.
With many applicants getting shut out of Fannie Mae and Freddie Mac backed loans, they’ll find themselves left with only private mortgage options. And many will find their only option to be that of an adjustable rate mortgage.
The new rules from the Consumer Financial Protection Bureau will also offer more protection against lawsuits for lenders that avoid low-income documentation mortgages and interest-only mortgages. But only if they stop approving mortgages for customers with a debt-to-income ratio higher than 43% of their monthly pre-tax income.
The short version? If you can lock in a mortgage with decent rates before the end of the year, then take it.