This move could mean higher prices and bigger down payment's for home buyers
The federal government is making its first move toward exiting the mortgage business by lowering the size of mortgages it will guarantee.
This could mean higher prices and bigger down payments for home buyers.
And it doesn't bode well for Realtors either.
Realtor Matt Epstein says the real estate game is already bad, but this news from Congress is like getting a lump of coal in a Christmas stocking.
The Federal Housing Administration will now only back loans up to $625,500 -- that's down from $729,750.
That means house hunters may no longer be able to get their dream home any time soon.
"In many states, if you say '$729,000,' they're picturing a 5 acre, 27-room home, at the top of a hill with a moat surrounding it," said Beth Peerce, President of the California Association of Realtors. "As opposed to in California, where we know in many areas, that will buy you a two-bedroom, two-bath condominium."
Realtors say the move could mean an even more serious market slow down.
And although they agree with tightening up loans, it's the timing that's off.
"Get your economy moving, get your homes selling at a normal rate, you get people not being foreclosed upon, that's the time to make changes. Not when things are at their very worst," said Peerce.