Sep
12
Is the FHA interest rate the same with any lender?
Posted by fhacam Comments (4)
I am a first time homebuyer interested in an FHA loan. Is the interest rate on FHA loans the same with every lender? I am curious because the rates aren’t posted online as conventional rates are (at least on the last site I was on.)
Thanks!
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No.
Rates are different for everyone and are based on your income, debt, down payment etc.
FHA rates vary just as conventional does between lenders. Not by Much, the rate market between lenders is pretty competitive right now. There may be a .25% differance between lenders on any given day. FHA rates are about .25-.5% above the current conventional rates right now. Also since rates do vary take in consideration that you are subject to the rates at which point you have an accepted contract. You need to get Pre-Qualifield first, house shop than rates shop. If you are going FHA and are a first time home buyer than rate shopping is the last thing to worry about. Make sure you talk to a real professioanal and get Pre-Qualed first.
Hope this helps.
Jason
Not exactly. They will all be pretty close. The difference is in the fees that each lender charges to get you the 5.5% interest rate. One will charge you nothing. One will charge you $2,000. That is part of your homework. Ask each lender what their total loan fees will be for a 5.5% fixed rate loan. THen you will be able to compare.
But there are always some lenders who know how to fool you. They promise the world but , at the last minute, they surprise you with $2,000 in fees. You have to talk to friends and neighbors to find which companies were honest..
First of all, don’t believe anything you see online, on TV, or in newspapers or magazines. They are always based on someone having perfect 850 credit scores and 20% down on a conventional loan. That option doesn’t exist to 99.9% of the population!
The truth is, you can’t lock into a rate until you find a home, make an offer, have the offer accepted, sign a purchase agreement, and then send a copy of that agreement to your lender.
Your middle credit score must be at or above 620 in order to have a fighting chance at obtaining an FHA (or any) Loan nowadays. Your debt to income ratio must at or below 43% for an FHA Loan as well. As of Jan 1, 2009, you are now required to put 3.5% minimum down as a down payment, and sellers can agree to pay up to 6% of the total loan amount in closing costs.
Rates do vary from one lender to the next, but they’ll likely be within about .25% of one another. The important thing to make note of is that lenders will lie to you if it means you’ll work with them.
For example, if you were interested in getting pre-approved for an FHA Loan but you haven’t found a home yet, that means that you don’t have a purchase agreement. And more importantly, that means that you can’t lock into a rate yet.
Well, lenders (loan officers) know this, so they can pretty much quote you at any rate they want because they know that no matter what rate they tell you now, they know that there are no guarantees, and they can tell you at a later time that the rate was only available for customers who were able to lock in at the time the rate was quoted.
Does this make sense?
Just remember that you can’t lock into a rate until your lender has a copy of the signed purchase agreement. Before that point, you are wasting your time discussing rates with any lender, lenders know they can flat out lie to you about rates and get away with it.
Don’t believe me?
Visit Zillow.com, and post an inquiry on there for a loan for $200K for example and in the notes section, request FHA Loan quotes only, and you’ll see anything from 4.5% to 5.375%, even though rates are currently ranging between 5.25 and 5.5% at the moment.
It’s impossible to compare the quotes because each none of the loan officers are being honest. They’re not letting you compare apples to apples because they know that if each lender simply posted their fees and current actual rate, most of them wouldn’t cut the mustard.
They post a ridiculously low rate, and then in their message to you the customer, they mention the words “buy down” or “valid only at the time of quote” or some meaningless BS like that. It’s unfair to you and unfair to many others who get fooled into believing that they’re going to get a mortgage for free with a 4.5% rate. It’s sad.
Here are a couple of sites that list daily national rate averages. Please note, each website will include “points” which means you must pay points to buy your rate down. Like I said, nobody can be simple and honest and just post the actual average rate, probably becuase it’s impossible to figure that out (think about it).
http://www.hsh.com (click on daily national statistics under the “stats” category)
http://www.bankrate.com (always involves points and is much lower than actual rates)
http://www.freddiemac.com (always involves points as well)
Find the lender that is honest and up front, and you’ll find the best rate along with it.
I hope this clears things up a bit for you!