FHA mortgage rates have been at historical
lows. So, if you are considering purchasing
mortgage at lowest FHA mortgage interest
rates, down payments and closing costs then
now is the right time to act. Read on for
comprehensive information on how to secure
lowest FHA loan rate with the best reputable
FHA lender operating in your area.
Why FHA Mortgage Rates are Low Compared with
other Conventional Mortgages?
FHA mortgage interest rates are definitely
lower compared to any other conventional
mortgage program.
The Federal Housing Administration,
which is a federal agency within the U.S.
Department of Housing and Urban Development
(HUD)
assists in offering Federal housing loans
with the intention of providing housing
opportunities for low to moderate-income
families. HUD does not offer the loans
directly rather they insure these mortgage
programs. This helps to lower the risk level
to lenders and as a result they willingly
offer lower FHA mortgage rates compared with
other conventional home loan programs.
Federal Housing Administration offers two
kinds of mortgage loans - single family (1-4
unit homes) and multi-family (5 or more
units). It is up to the borrowers to select
the most suitable home loan program with the
best FHA mortgage rate.
You may
choose to 'Buy Down' your FHA mortgage Rate
Sometimes, you have the option to "buy down"
the FHA loan interest rate. In a 2-1 buy
down, you can reduce the initial FHA
mortgage interest rate on your mortgage by
2% the first year, 1% the second year and 0%
every year after that. To buy down a
mortgage, a fee in the form of discount
points is charged. Discount points lower the
loan interest, as the discount points are
basically treated as prepaid interest.
Suppose you wish to temporarily lower the
FHA loan interest rate on a 6% 20-year
mortgage, the rate would be 4% the first
year, 5% the next year and 6% in the
subsequent years.
You also have the option to permanently buy
down your FHA home loan rates. In permanent
buy down mortgages, the borrower pays
discount points to lower interest on the
mortgage over the life of the loan. Suppose
you wish to permanently buy down the loan
rate from 6% to 5.5% on a 20-year mortgage,
the FHA mortgage rate would be 5.5% for the
next 20 years (provided you meet the
required mortgage points upfront).
Generally, a 2-1 buy down is not
recommended, as the savings obtained from
the low payments is cancelled out by the
closing costs. The low Federal loan rate
does not make a difference in this case. A
permanent buy down is recommended if the
seller is paying for the buy down and the
buyer occupies the property for at least
three years. You can thus enjoy the savings
of a low interest rate FHA mortgage for a
long time.
More Tips
to help you Secure Lowest FHA Mortgage Rate
FHA mortgage rates are to a great extent
dependent on your individual credit
situation. Therefore, in order to secure
lowest FHA interest rates it is important to
maintain a good credit record and
FICO score. If the interest rates on
federal housing drop significantly and you
hold a fixed rate mortgage then a
refinancing could be considered in order to
secure lowest FHA loan rates. The FHA
streamline refinance programs allow
borrowers to lower housing administration
loan rate easily with fewer costs and with
less documentation. Finally, apart from
considering only FHA home loan rates the
borrowers should take care to consider the
entire FHA mortgage cost prior to applying
for their home loan. This includes FHA
mortgage rates, APR, Discount points, down
payments and all other costs associated with
securing the FHA mortgage.
We make the American
dream your reality. Whether you're a first time home buyer, moving to a
new home or want to refinance your existing conventional or FHA
mortgage, our FHA home loan program will let you purchase a home with a
very low down payment and flexible guidelines. We have all the
information to take care of your FHA home loan research needs. With no
income limits or credit scoring, many people who can afford the monthly
mortgage payments and have reasonable credit will qualify for an FHA
home loan.
Remember, HUD does not make FHA home loans. HUD does insure the loans
that we assist you in acquiring. Let us help you get an FHA home loan at
the lowest possible rates.
