The interest rate on your FHA loan impacts your mortgage payment so it is important to get the lowest FHA rate possible. The interest rate available to you will vary according to loan product. While interest rate impacts payment and is a factor, another factor on your transaction, is professionalism and experience of the team you’ve selected to help you close. Knowing you can and will close as agreed is perhaps of equal importance.
What are the current FHA Rates?
You may have heard interest rates for mortgages are at an all time low. This is also true on FHA loans. There is a great opportunity to buy a new home or refinance your current mortgage and save money. FHA rates on vary depending on the loan product selected. Ultimately it is best you call or complete the form to get a quick “current market” FHA rate quote specific to your situation. Below find the FHA loan program and the corresponding rate formula.
FHA 30 Year Fixed Rate .25% below offered CONVENTIONAL LOAN 30 Year Fixed Rate
FHA 15 Year Fixed Rate .5% below 30 Year FHA Fixed Rate
FHA 5/1 ARM Rate Equal to or slightly lower than the 15 Year Fixed Rate
FHA 3/1 ARM Rate .5% below the FHA 15 Year Fixed Rate
Interest rates do change often (see below). To provide you current market FHA rates click here:
Other resources available to you:
FHA Purchase Loan *includes a rent vs. own payment calculator
FHA Refinance Loan *includes a refinance savings payment calculator
FHA Loan Calculator *calculators for purchase or refinance
How to obtain below market FHA Rates
In some cases it makes sense to go for the lowest rate possible. This is done by paying for an interest rate ”buy down”, also known as points. You can choose to spend more money up front on a lower rate to save in interest over the long term. Some times 1% buy down lowers your rate by .25% at other times just above or below that amount. The cost versus benefit on a buy down depends on the market costs for the rate at that time. On average the return on the investment for the lower rate comes between 7-10 years. Again, buy downs are usually used to help you obtain below market FHA rates to save in the long run.
What causes interest rates to go up or down?
FHA interest rates are based on the bond yield for the mortgage back securities that day. There is usually a series of rates & corresponding price. When the price of the mortgage bond is cheap there is a lot of demand for the bond so prices can go down. Historically investors have turned to the bond market in times of trouble or uncertainty. On the other hand, when investors feel good about other avenues to invest with a greater return they tend to leave the bond market. This raises the rates and price of the bonds to attract money back into the mortgage bond market. Today we are in unprecedented circumstances. There are many unconventional forces at work in the marketplace impacting the price of these bonds and therefore making it difficult to predict which rates rates are heading. This is true for FHA rates as it is with any other. Most analyst follow the trends. What will rates be tomorrow? This is the million, maybe the billion dollar question.
How do I lock in my rate?
To lock in your FHA rate contact your loan officer and review current pricing. At that time request the rate to be locked in for a certain period. FHA rate lock periods are usually 15, 30, 45, 60 days but can be more. By locking in your rate you have secured the desired interest rate. This usually means if the FHA rates market improves you do not see the benefit although if there is a significant improvement you should be able to renegotiate the rate/ pricing. This option is different lender to lender. Upon requesting your rate lock your loan officer has three days to provide you an updated good faith estimate showing your interest rate as locked and the pricing. If for some reason all of the time on the lock is used up most lenders allow you to extend the rate lock but it does cost. The cost and rate lock extension policy also varies lender to lender. We usually recommend locking in your FHA rate before submitting the loan to underwriting to ensure for a smooth process where you know what you will see at closing.
*Absolutely FREE with no obligation