Do You Need a Lower Interest Rate on an FHA Mortgage?
Work on Your Credit Report
The interest rate any borrower is offered on a mortgage loan is based in part on credit scores and other financial qualifications. The best thing you can do initially to get a lower mortgage loan interest rate to buy real estate with is to start early on your credit.
Come to the mortgage application process with no fewer than 12 months of on-time payments on all financial obligations and work to reduce your debt ratio.
Compare Participating FHA Lenders
Not all lenders offer the same interest rates on FHA mortgages. Don’t accept the first few rates you see; compare a good sampling of lenders to see what the average rates might be at the time you are applying. Remember that you can always pit one loan officer against another, telling the next person the rates you were offered at the last financial institution and “can we do any better”?
Consider an Adjustable Rate Mortgage
If you want to buy a first home or another property you intend to live in as your primary residence, consider an FHA Adjustable Rate Mortgage loan. These loans have strict rules about how many times and how much the interest rate can be adjusted. There will be an introductory rate, also known as a teaser rate.
This rate may be lower than the going 30-year fixed rate mortgage loan interest rate; borrowers may apply for these loans with the goal of refinancing the mortgage once the introductory rate ends or when the mortgage rate gets adjusted higher than a certain amount.
FHA Adjustable Rate Mortgages can be refinanced with an FHA Streamline Refinance loan which is required to bring some tangible benefit to the borrower. One of those benefits is a lower interest rate.
Consider Buying Discount Points
Depending on the type of home loan you are getting, discount points may be an option. When you buy discount points you are buying down the interest rate, which can be a good strategy for those planning to stay in the home long-term. Ask your lender about the terms and conditions for buying discount points at that financial institution.
A lower mortgage loan interest rate is possible, but knowing these options is half of the effort of getting into a better rate.
Sometimes It Pays to Refinance
Don't Forget Your Closing Checklist
Monthly Payments Establish Good Credit
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