FHA Loan Rates Still Below 3% in the Early Days of the New Year
How far? At press time, FHA mortgage loan interest rates are reported at 2.25% (best execution, assuming ideal conditions including a well-qualified borrower) which is far below the FHA 30-year fixed rate loan interest rate at the height of its 52-week average of 4.0%.
You read that correctly, at least once in the last 52 weeks, FHA loan interest rates rose to 4.0%, only to drop down over time below the three percent zone.
The fact that rates are still below three percent is great news for anyone who wants to build a home on their own lot, refinance an existing mortgage, purchase a condo unit with an FHA loan or buy a typical suburban home.
Some fret because they aren’t quite ready for a loan when they read about the latest, low interest rates. If you explored your FHA home loan options a year or two ago and are excited about low rates now but aren’t quite there yet?
It’s useless to worry about interest rates you don’t have access to right now. What you can do in the meantime to get ready includes not opening new lines of credit, paying all your bills on time every time, and lowering your debt ratio.
But there are also things you can do to reduce the overall cost of your loan up front that could offset having to wait to apply for a home loan and experiencing a higher interest rate than you could have gotten now.
Those things include borrowers negotiating with the seller for a seller concession on closing costs. Your seller can pay up to six percent of your closing costs with an FHA loan, this is allowed in the home loan rules.
You can also talk to the lender about purchasing discount points that can reduce the interest rate, but don’t negotiate points if you don’t plan to keep the house long-term, it may wind up costing more than it’s worth.
If you are building a home with an FHA One-Time Close construction loan instead of purchasing existing construction, you may be able to avoid the FHA minimum 3.5% down payment on the loan if you are providing your own land to have the home built upon rather than purchasing land as part of the loan.
Ask a participating FHA lender about options you can use to reduce your out of pocket costs for the home loan, especially if you are keen on offsetting a higher interest rate than the ones you are seeing now.
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