Mortgage Loan Interest Rate Facts for 2020
June 9, 2020
There has been a lot of volatility in mortgage loan interest rates since March 2020, and at the time of this writing, FHA mortgage loan interest rates have technically dipped below the three percent range again, though for how long is not certain.
FHA mortgages are usually offered with lower interest rates than conventional mortgages; borrowers who qualify for the lowest down payment (with FICO scores and other financial qualifications) often find lower rates with government-backed loans such as the FHA single family home loan program.
Here are some basic facts about mortgage loan interest rates that can help you better prepare for your loan when the time is right.
Credit Scores Affect Your Interest Rate Options
Work on your credit as early as possible; you will be offered a lower rate for a better FICO score depending on circumstances.
FICO Score Alone? No.
Your repayment history on your monthly obligations will also count in the lender’s “big picture” credit report review.
FHA Does Not Set Rates
The participating FHA lender you choose will offer you a mortgage loan interest rate based on variables including the current market, your credit scores and other financials, and what the going rate is for similar transactions in your housing market.
You Can Buy Down the Interest Rate
You may be permitted to purchase “discount points” that can reduce your interest rate and save you money over the long term. Buying discount points doesn’t automatically benefit all borrowers; those who plan on selling the home in the near to mid-term should consider the fact that they may not stay in the home long enough to reap the long-term reward of lower interest rates 10, 20, even 30 years down the line.
You Can Refinance Into a Lower Rate
If you aren’t approved for an FHA mortgage at the interest rate you think you should have, you can always refinance the loan using an FHA Streamline Refinance.
These loans feature no FHA-required credit check or appraisal and usually must result in a financial benefit to the borrower such as a lower mortgage rate, lower payment, etc. Streamline refinance loans are for existing FHA mortgages only. They are considered FHA-to-FHA refi loans.
Talk to a loan officer about these options today and learn what you can do with an FHA loan or FHA refinance loan.
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Understand the Reasons for Private Mortgage Insurance
Carefully Read Your Closing Disclosure
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FHA mortgages are usually offered with lower interest rates than conventional mortgages; borrowers who qualify for the lowest down payment (with FICO scores and other financial qualifications) often find lower rates with government-backed loans such as the FHA single family home loan program.
Here are some basic facts about mortgage loan interest rates that can help you better prepare for your loan when the time is right.
Credit Scores Affect Your Interest Rate Options
Work on your credit as early as possible; you will be offered a lower rate for a better FICO score depending on circumstances.
FICO Score Alone? No.
Your repayment history on your monthly obligations will also count in the lender’s “big picture” credit report review.
FHA Does Not Set Rates
The participating FHA lender you choose will offer you a mortgage loan interest rate based on variables including the current market, your credit scores and other financials, and what the going rate is for similar transactions in your housing market.
You Can Buy Down the Interest Rate
You may be permitted to purchase “discount points” that can reduce your interest rate and save you money over the long term. Buying discount points doesn’t automatically benefit all borrowers; those who plan on selling the home in the near to mid-term should consider the fact that they may not stay in the home long enough to reap the long-term reward of lower interest rates 10, 20, even 30 years down the line.
You Can Refinance Into a Lower Rate
If you aren’t approved for an FHA mortgage at the interest rate you think you should have, you can always refinance the loan using an FHA Streamline Refinance.
These loans feature no FHA-required credit check or appraisal and usually must result in a financial benefit to the borrower such as a lower mortgage rate, lower payment, etc. Streamline refinance loans are for existing FHA mortgages only. They are considered FHA-to-FHA refi loans.
Talk to a loan officer about these options today and learn what you can do with an FHA loan or FHA refinance loan.
------------------------------
RELATED VIDEOS:
Understand the Reasons for Private Mortgage Insurance
Carefully Read Your Closing Disclosure
Buying a Home With a Co-Borrower
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