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What’s bad for the economy is often good for mortgage loan rates, and that’s one thing to remember about the current hard times people are experiencing. Many borrowers rush to refinance because it’s an opportunity to save money on monthly mortgage payments.

FHA Rates Near 50 Year Low!

Now is the time to drop the interest rate on your 30-year mortgage or refinance into a 15-year home loan.

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FHA.com is a privately owned website, is not a government agency, and does not make loans.

What to Remember When Home Loan Interest Rates Rise and Fall

August 13, 2020

What to Remember When Home Loan Interest Rates Rise and Fall
What do you need to remember when mortgage rates rise and fall? Let’s use the example of the week of June 22, 2020, which started with mortgage rates holding steady near all-time lows.

FHA mortgage loans for fixed-rate 30 year mortgages were reported at a best-execution 2.50% and there is some speculation among many mortgage-centric blogs and websites that these numbers (or interest rates close to them) could persist depending on how long COVID-19 continues to negatively affect the economy.

What’s bad for the economy is often good for mortgage loan rates, and that’s one thing to remember about the current hard times people are experiencing.

The reason many rush to refinance with rates start to move lower is precisely because it’s an opportunity to save money on monthly mortgage payments, save over the lifetime of the loan with lower interest rates, or to get out of an adjustable rate mortgage.

What do you need to remember about rates as they continue to remain below the three percent range for FHA loans?

The first thing to keep in mind is that these low rates aren’t offered to all applicants; if your credit scores are hurting, you will be offered a different interest rate. It’s within your power to improve your credit scores through credit monitoring and proactive measures to reduce your debt and pay on time. But many will need to anticipate a higher rate.

That said, even the higher interest rates these applicants may face could be lower than what they would have been offered a year ago today. And that’s something to keep in mind when planning a new purchase loan or a refinance--how much do you save now when rates overall are historically low?

If you are ready to commit to a forward loan such as a One-Time Close construction loan (even first-time home buyers can apply for this type of mortgage), FHA Condo Loan, or even an FHA 203(k) Rehab loan, contact a loan officer to get pre-qualified for a loan to see how much loan you can afford.

This will be a big help for budgeting to save for your down payment and closing costs. If you know how much an estimated down payment might be (based on the size of the home you need and the price range) your pre-application planning will be much easier to manage.

And don’t worry if you are not ready to commit to a home loan right now--the rates offered are subject to change daily, sometimes even hourly. There is always a risk of interest rates going higher or lower depending on current news, investor reaction to those headlines and other market forces, etc. 

Those who aren’t ready for a loan even in times of historic lows for rates should concentrate on getting ready and making sure they have worked on their credit scores and loan repayment history. Are you ready for a home loan? You are if you have done the following:
 
  • Actively monitor your credit
  • Know the contents of your credit report
  • Reduce credit card debt under 50% (30% of the credit limit for each card is ideal)
  • Decided on the type of home (condo, suburban home, townhouse, mobile or modular home, etc)
  • Have a down payment savings plan
There are other steps, but this short list is a very good starting point.

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