I am looking to buy a HUD home and will be applying for a FHA loan I just wanted to know how much the interest rate may be?

Do you think they will go down again?

I am waiting to lock my rate – do you think rates will go up or down over the next 2 weeks….Thank you!

I was told by someone that depending on the loan the interest rate can go down but not up on some FHA 30 fixed rate mortgages. Is this true?
I know its fixed and I know what that means but it is a FHA loan. For example I also heard that they can be assumable which standard loans are not. Are they also not assumable? Have I been missinformed here also?

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In the old days, you used to be able to call a lender, give them a note amount and term, and get a quote.  Lickety split.  Not a lot of questions.  Just “boom”, there’s your answer. It certainly made interest rate comparison much easier.  But in today’s mortgage lending world, it’s just not that easy. 

In fact, say you’ve got two customers buying identical homes in a development.  Each customer can be quoted completely different interest rates for different reasons.  Even if they have the same credit score.  That’s because you’re granted different discounts or assessed with different cost additions for various aspects of your lending profile. 

For instance, one guy may be getting a conventional loan, and the other an FHA (Federal Housing Administration) loan.  With FHA and a credit score of 620, there are no discounts or additions for credit score that a lender will add to the total price.  But, dip below a 620 and there will be quite a pricing differential.  With a conventional loan, you’ll get discounts the higher your credit score.  Thus, a 620 credit score in the conventional realm does not have as much interest rate muscle as a 720.  And there are different cost hits in between for every 19 point differential. Plus, if you have less than a 620, you probably won’t get conventional approval.  A typical lender nowadays has to be really good at reading a chart to quote a loan in the conventional world. 

Another big factor is loan size.  Again, you’ll probably pick up a discount if you’ve got a healthy sized loan.  However, if you’re financing a smaller amount, it may cost you a bit.  Thank goodness for excellent first time homebuyer programs that let qualified borrowers avoid some of these pricing hits. 

Another big difference in interest rates available is the buyer’s intention for the property.  If it’s a primary residence or a second home, one gets a better rate than if it’s an investment property.  From an underwriting perspective, a borrower is less likely to quit paying a mortgage for a property that is intended for personal use.  Statistics have proven this aspect of lending to be quite true.  Of course, if it is an investment property, the borrower is going to have to come up with a heck of a lot more money out of pocket anyway.  If it’s a manufactured home, you have to reconsider loan programs again.  Some programs aren’t available for manufactured homes, and especially if it is a manufactured home that is an investment property. You’ll have to find a lender that specializes in this type of loan.

As touched on before, the type of loan matters, too.  Conventional rates are different than FHA rates, which are different than VA rates, which are different than Rural Housing rates.  Even for the same house.  And again, as mentioned before, throw THDA or another first time housing program into the equation, and you start all over again. Of course, you can’t get a VA loan if you’re not a veteran or the spouse of one buying a loan. And you can’t get a rural housing loan if you’re in the wrong zip code and make too much money. So, at times, your choices are limited for you.

Even if you get the same interest rate, it doesn’t necessarily mean your payment will be the same.  If your loan requires mortgage insurance, your monthly premium could differ because of your credit profile. 

I guess the best advice is to be patient when considering loan programs and payments.  Make sure you explore all your options.  And don’t worry about the guy sitting next you.  Just keep your eyes open and work with a lender that’s trustworthy. 

I’m approved with Chase, no discount points…I really do not want a bunch of companies pulling my credit if it’s not necessary and I can’t get a better rate.

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I just put an offer on a house that I really think will be accepted. I have been pre-approved for an FHA loan and the rate last week hovered around 5.25%. We are closing in 60 days. In the next two months are rates expected to go up?

FHA mortgage loans provide the Best Interest Rates

 Florida FHA Mortgage Loan

Florida home buyers should know the many advantages of the FHA mortgage loan programs. FHA loans were created to help increase home ownership. For the Florida home buyer the FHA program can simplify the purchase of a home, making financing easier and less expensive than a conventional mortgage loan product. Some highlights of the Florida FHA loan program include:

Minimal Down Payment and Closing costs.

Down payment less than 3% of Sales Price Gifts are allowed Seller can credit up to 6% of sales price towards closing and prepaid costs. 100% Financing available No reserves required. FHA regulated closing costs.

Easier Credit Qualifying Guidelines such as:

  No minimum FICO score or credit score requirements. FHA will allow a home purchase 2 year after a Bankruptcy. FHA will allow a home purchase 3 years after a Foreclosure.

APPLY NOW AT http://www.fhamortgagefhaloan.com/

 The Federal Housing Administration (FHA) is a United States government agency created as part of the National Housing Act of 1934. The goals of this organization are: to improve housing standards and conditions; to provide an adequate home financing system through insurance of mortgage loans; and to stabilize the mortgage market.

History of FHA home loans

Back in the the Great Depression, the banking system failed, causing a drastic decrease in home loans and ownership. At this time, most home mortgages were short-term (three to five years), no amortization, balloon instruments at loan-to-value (LTV) ratios below fifty to sixty percent.The banking crisis of the 1930’s forced all lenders to retrieve due mortgages. Refinancing was not available, and many borrowers, now unemployed, were unable to make mortgage payments. Consequently, many homes were foreclosed, causing the housing market to plummet. Banks collected the loan collateral (foreclosed homes) but the low property values resulted in a relative lack of assets. Because there was little faith in the backing of the U.S. government, few loans were issued and few new homes were purchased.

In 1934 the federal banking system was restructured. The National Housing Act of 1934 was passed and the Federal Housing Administration was created. Its intent was to regulate the rate of interest and the terms of mortgages that it insured. These new lending practices increased the number of people who could afford a down payment on a house and monthly debt service payments on a mortgage, thereby also increasing the size of the market for single-family homes.

The FHA calculated appraisal value based on eight criteria and directed its agents to lend more for higher appraised projects, up to a maximum cap. The two most important were “Relative Economic Stability,” which constituted 40% of appraisal value, and “Protection from adverse influences,” which made up another 20%.

The FHA Mortgage loans Today

Back in 1965, the Federal Housing Administration became part of the Department of Housing and Urban Development (HUD). Since 1934, the FHA and HUD have insured over 34 million home mortgages and 47,205 multifamily project mortgages. Currently, the FHA mortgage loan has 4.8 million insured single family mortgages and 13,000 insured multifamily projects in its portfolio. The Federal Housing Administration is the only government agency that is completely self-funded. However, although it claims to operate solely from its own income at no cost to taxpayers, there is an implicit guarantee that the taxpayer will help them in times of need.

During budget planning for 2008 HUD had been projecting $143,000,000 budget shortfall stemming from the FHA program. This is the first time in three decades HUD had made a request to Congress for a taxpayer subsidy. Even though FHA is statutorily required to be budget neutral, the GAO is projecting taxpayer funded subsidies of half a billion dollars over the next three years, if no changes are made to the FHA program.

FHA Required Down Payment

A mortgage applicant downpayment may come from a number of sources. The 3.5% requirement can be satisfied with the borrower using their own cash or receiving a gift from a family member, their employer, labor union, non-profit or government entity. Since 1998, non-profits have been providing downpayment gifts to borrowers who purchase homes where the seller has agreed to reimburse the non-profit and pay an additional processing fee. In May 2006, the IRS determined that this is not “charitable activity” and has moved to revoke the non-profit status of groups providing downpayment assistance in this manner. FHA has since stopped down payment assistance program through 3rd non profits. There is a bill currently in congress that hopes to bring back down payment assistance programs through these so called non profits.

FHA Mortgage Insurance for Homebuyers

The FHA insures only a limited range of mortgages provided by FHA-approved lenders. PMI insurers service mortgages of the conventional market. PMI is required if a homebuyer borrows more than 80% of the property’s purchase price in one loan; the FHA insurance is required for any FHA mortgage, irrespective of the size of the down payment provided. The premiums for both insurances get cancelled at a certain point (was not true of FHA premiums before Jan. 1, 2001), but the conditions for this to happen are different (see below).

Mortgage insurance is available for housing loan lenders, protecting against homeowner mortgage default. For a small fee, lenders can obtain insurance for a value of ninety seven percent of the appraised value of the home or building. FHA loans are insured through a combination of a small upfront mortgage insurance premium (UFMIP), as well as a small monthly mortgage insurance (MMI) premium.

The (UF)MIP or (Up-Front) Mortgage Insurance Premium is the upfront fee you pay either in cash at close or financed into the loan. The MMI or Mutual (sometimes called Monthly) Mortgage Insurance is your monthly premium which is included in your payment. This MMI is an annual premium which is to be remitted monthly, it must be paid for 5 years regardless of your LTV (loan to value) if after 5 years your LTV is 78% or less it may be canceled on loans originated after 1/1/01. If your loan term is 15 years or less the 5 year rule does not apply.

In many instances where the home owner has a poor to moderate credit history, the monthly mortgage insurance premium will be substantially less expensive with an FHA loan than with a conventional loan regardless of LTV – sometimes as little as one-ninth as much per month depending on the borrower’s exact credit score, LTV, loan size, and approval status. A borrower with an FHA loan always pays the same mortgage insurance rate regardless of their credit score. This is especially of benefit to borrowers who have less than 22% equity in their homes and credit scores under 620. Conventional mortgage insurance premium rates factor in credit scores, whereas FHA mortgage insurance premiums do not. When a borrower has a credit score under 620, conventional mortgage premiums spike dramatically. If a borrower has a credit score under 575, they may find it impossible to purchase a home for less than 20% down with a conventional loan, as the majority of mortgage insurance companies no longer write mortgage insurance policies on borrowers with credit scores under 575 due to a sharply increased risk. When they do write mortgage insurance policies for borrowers with lower credit scores, the annual premiums are sometimes as high as 4% to 5% of the loan amount. Based on this, if a consumer is considering purchasing a new home or refinancing an existing home, they would often be well-advised to look into the FHA loan program.