What to Ask When Mortgage Rates Fall
And then on Thursday, June 11, 2020, conventional loan rates made big headlines by plunging below the three percent threshold.
That’s not news for FHA mortgage loans--government backed mortgages have flirted with sub-three percent levels for some time and at press time the best-execution FHA mortgage loan interest rate for a 30-year fixed rate mortgage is reported at 2.50%. What questions should you be asking when this sort of rate drop or another one like it happens?
Will You Get the Lowest Rates?
Those rates are not open to all applicants; the rates offered depend on the type of loan, the loan term, and other variables. Borrowers also have to contend with closing costs, which may be higher on these lower-rate loans.
There are other factors; variations among lenders is one. You won’t find all lenders offering the same mortgage loan interest rates even for the same loan products.
It pays to shop around for a loan and many borrowers fill out online forms to be put in touch with participating FHA lenders to learn what is currently on offer.
Could Mortgage Rates Go Even Lower?
Some finance writers believe mortgage rates could drop even further, approaching the two percent range or below. But others disagree, saying that rates seen now could go away for years at some point.
The economic factors combining to push mortgage rates this low may not last forever, and when the Fed stops buying bonds, historically rates go back on the rise for a time.
If you are considering your options for a home loan or home refinance loan, remember two things. One, if your credit scores are not high enough, you won’t be offered the most competitive rate.
What if I Don’t Qualify for the Best Rates?
Two, even if you are offered a higher interest rate, those rates are still amazingly low and you should consider the rate you might be offered (with your current FICO scores) would be even higher if the going rate were not already so low.
Talk to a loan officer today about your options for a home loan or refinance loan; it never hurts to know your options and you may have more flexibility than you realize to purchase or refinance your home.
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