Just a reminder: as you know, the Fannie Mae loan limit of $729,750 on a single family residence, has been extended through December, 2010. Beyond that, the limts on 2 to 4 units have also been extended as follows:
2 units: $934,200
3 units: $1,129,250
4 units: $1,403,400
These limits apply both to Fannie Mae and Freddie Mac conventional loans as well as FHA-insured government loans.
You may be hoping that today’s low 30 year fixed rates will reduce your monthly payments on your TIC unit with a simple refinance. Yes, it would be great to convert to a more predictable 30 year fixed rate loan while you wait another year for a more favorable lottery.
But don’t get too excited. Some owners will benefit by the change, but most won’t, not unless they purchased their unit long ago or with a sizeable down payment.
Under the extended guidelines, the maximum loan to value on a 2 unit building is 80%, but on a 3 to 4 unit building, it’s only 75%. Translation: if you purchased your TIC interest within the past tive years with 10% down, it’s unlikely your loan to value is now low enough to take advantage of a 30 year fixed rate loan. Secondly, if you obtained an interest ony loan, even if you have the equity (a low enough loan-to-value ratio), you probably won’t like the payment jump from the interest only payment to the fully amortized payment.
Feel free to contact me if you’d like me to run a scenarios for you to see if refinancing will make sense under the extended loan limits.
Tags: 2 units, 3 units, 4 units, government, loan limits
