FHA Loans and Mortgage Interest Rates
FHA Home Loans and Interest Rates: Know the Rules
The rates you see advertised on the internet from third party agencies are not necessarily the rates you will be offered. The lender will make you an offer based on your credit report using the current going rate as a baseline.
Borrowers who are seen as good credit risks will get a more competitive interest rate than those who do not. If you want to make yourself more competitive for the best rates, it is very important to work on your credit as early as possible before you apply for a mortgage loan. Give yourself at least one year to establish a record of on-time payments on all financial obligations.
FHA loan rules in HUD 4000.1 state clearly that the FHA and/or HUD do not set or regulate the interest rates you will be offered except to require that they be “reasonable and customary” compared to similar home loan products.
FHA Loan Interest Rates Are Not Offered Based on Your Status as a First-Time Home Buyer
That basically means that there is no disadvantage to applying for an FHA mortgage as a repeat customer, and there is no FHA-provided difference in the interest rate based on status as a first-time home buyer. That does not mean your participating lender won’t have an offer for you based on the current promotions of that financial institution.
It simply means that borrowers are offered mortgage loan interest rates based on the current market and the results of the credit inquiry.
You Can Buy Down Your FHA Mortgage Rate
Borrowers can choose to purchase discount points to get a lower rate. This option may be best for those already planning to stay in the home long-term and who have financial goals that include saving money over the duration of the loan term.
Interest Rates Change
The rates you see advertised today may be different tomorrow. And if your lender makes you an offer, the mortgage interest rate is still subject to change until you enter into a mortgage rate lock agreement with the lender to protect you from further interest rate moves for a specified period of time until the loan closes.
Get Your Questions Ready for Your Loan Officer
The Last Part of the Transaction Is the Mortgage Closing
Know What You Can Borrow With Prequalification
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