FHA Mortgage Rates

As a result of the subprime mortgage meltdown andtwo years. Based on the information you provide, plus
the global economic crisis of 2009, home mortgagesthe results of an FHA investigation into your credit
have become more difficult to obtain. Even borrowershistory, the FHA may qualify you and offer to insure
with good credit are often required to pay higheryour mortgage.
interest rates and put more money down whenThe FHA offer to insure will allow your lender to give
purchasing a home or refinancing. Borrowers with badyou better terms-perhaps by giving you a lower
credit or little credit history may find it very difficult tointerest rate or accepting a down payment as low as
get home financing. For many borrowers, an FHA3.5%. Here are some of the factors that will determine
mortgage looks like a good solution.your FHA mortgage rate:o Amount of loano Length of
What is an FHA mortgage? The term is oftenloano Adjustable-rate (ARM) or fixed-rateo Amount of
misunderstood, and many buyers believe that FHAdown paymento Discount pointso Closing costso Your
mortgage rates are set by the government and arecredit ratingo Your credit historyo Your income levelo
offered to the public.Lock-in periodo Conforming loan limits
This is not what the FHA does. The FHA (the FederalLet's review a few of the factors that affect your
Housing Administration, which is a part of the U.S.FHA mortgage rate. For example, the loan period is a
Department of Housing and Urban Development, orsignificant factor. Shorter loans (say, 15 years) will raise
HUD) does not make loans. The FHA does not setthe cost of your monthly payments but will save you
mortgage rates or sell houses. The FHA works withthousands of dollars in interest payments over the life
banks and FHA-approved lenders to insure mortgagesof the loan.
on single family and multifamily homes in the UnitedAt the beginning of each year Fannie Mae and Freddie
States. Since its inception in 1934 the FHA hasMac establish conforming loan limits, which may affect
become the world's largest insurer of mortgages,your interest rate. If the amount you borrow exceeds
covering over 34 million properties.the conforming loan limits that have been set for the
How does the FHA help homebuyers? By providingyear, your interest rate may be higher.
insurance to lenders so that if you default on yourAn adjustable rate mortgage may initially give you a
mortgage, the FHA will pay off the lender. It is a formlower rate than a fixed interest mortgage, but your
of private mortgage insurance, only it is provided bypayments are subject to increase as soon as the
the U.S. government. This insurance allows a lender tointerest rate changes.
make mortgage loans to borrowers who may haveThe size of your down payment will also affect your
poor credit or who otherwise would not qualify for ainterest rate. While FHA loans permit down payments
prime loan rate.as small as 3.5%, a larger down payment, especially
Determining Your FHA Mortgage Rategreater than 20%, will get you the best available rates.
When you go to an FHA-approved lender to apply forThe more money you can offer as a down payment
a mortgage, the lender may ask you to apply for anthe better deal you will get, because it shows the
FHA mortgage (remember, this is just a term oflender that you are capable of saving money and you
convenience; your mortgage will come from yourare serious about your finances. And because you are
lender, not the FHA). As part of the application processborrowing less, your monthly payments will be lower.
you will be asked to fill out a separate FHA mortgageThere are many factors that go into determining your
application. You will need to supply information aboutFHA mortgage rate. It is worthwhile to apply for an
your previous addresses, your employment history,FHA mortgage to get the best deal possible.
W2 forms, and federal income tax forms for the past