AL and FL Mortgage News

Coming in just second to the increase seen in 2006, the 2022 conforming loan limits are out and available for use nearly 2.5 months earlier than expected.  That really is AWESOME news!! While limitations do apply, this can translate with approved credit the ability to buy an owner occupied single family home for $657,890 with 5% down, $694,440 with 10% down on a second home, and $781,250 for investment purchases with 20% down.  This applies to all counties in Alabama and Florida, if you are outside this area it may be different.

The advantage isn't just for those buying but for those buying to renovate, owners who want to renovate their existing home, or anyone building new construction using construction to permanent financing this is big news.

Announcements on USDA and FHA limits are expected to be on time in the final weeks of this year so check back with us on those.

If you want to know what this looked like in 2021 click here.

To learn more about renovation mortgages versus cashout-refinancing click here.

For ins and outs of residential construction financing click here.

Do you have questions, email Questions 

Please note purchase prices listed above are rounded down to the nearest $10 based on standard program maximum loan to values. Exceptions apply.  Nothing here constitutes an offer for financing and any information is based on approved credit.  For additional rate and cost information email service@gulfstatesfinancial.com NMLS # 835698. Equal Housing Lender.

Posted by Devin Murray on October 14th, 2021 12:05 PM

So I was getting a haircut at noon the other day and my stylist brought-up the cost of lumber in conversation.   She is extremely sharp, but it took me back because I know she is not buying, selling, or building and this was the second time in about 4 weeks she mentioned this.  A few weeks earlier I was at a family gathering where this came-up.   I overheard a couple discussing it while I was eating lunch in a downtown café a few weeks back.  It would seem that lumber prices (and maybe a shortage of chips for auto manufacturers) is the talk of the town everywhere I go.  Since I finance residential properties and pay attention to economic data, I felt compelled to contribute some factual and maybe useful information to the ongoing discussion.

After reading-up it appears the shutdowns in 2020 impacted the processing of lumber in the US at the mill level which eventually decreased supply while demand seemed relatively steady.  To heavily oversimplify the discussion anyone can track the price of lumber because it is a commodity and lumber futures (aka futures contracts) are traded on the NASDAQ exchange using symbol LBS.  In the real-world cash lumber prices we experience at the local store versus lumber futures are not exactly the same but let’s assume they are and skip the explanation of how and why they are different for now.

At quick glance at LBS you can see it did began a meteoric rise in early March 2021, reached a peak price of around $1,700 in early May but as of the third week of June prices have already corrected back to $900 early March levels.  For all of 2020 we saw an average in the $400-500 range (excluding when COVID immediately hit) and in the last five years the mean was somewhere around $350-400.  So is the cost of wood going to remain in the current territory of basically double and triple what we have seen in the last five years?  Economics say prices we have seen in the last 90 days aren’t sustainable and we have watched the sharp decline they predicted will continue.  But what does this actually mean for the hair stylist, my family members and the few dozen others who have mentioned it?

I never mentioned this to anyone but when prices were in the $1,600 range I ran into my contractor on the baseball field and yet again he brought it up.  When I asked this same question he smiled at me and said, “Let me put it to you this way, a lumber package for an average 2000 square foot house is about $25,000 higher than this exact time last year”.  Really I thought?  “Seriously, that’s it?” I said aloud.  

Given the price of lumber futures being down 40%+ since I had this conversation that would mean the cost difference for that same 2000 square foot home is now on $15,000.  To put that in to perspective that is about the cost of 75 additional square feet or a forced downgrade of flooring or cabinetry in most homes.  Coupled with the cost of what the full $25,000 was before March 2020, most people would never feel a significant impact of this at all.

In essence the cost of money plummeting in the last 15 months NOT lumber cost should still overshadow the hottest topic around town.  Fact is if you are buying, selling, building or remodeling this is a fair warning to get moving as quickly as possible as 30 year rates seem to be rising above the 3% mark yes even in a seller's market.   For anyone else not in this category, I would also encourage you to learn about why the cost of money is so different in 2021 especially those who are mortgage free.  

We are licensed in Florida and Alabama with more states coming soon.  If you want a quote or other information regarding mortgages you can plug-in your information securely on our site 24 hours a day, call us at 888-269-8335, or send us an email  Make it a great day! 

Posted by Devin Murray on June 21st, 2021 4:36 PM

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