FHA Interest Rates Back to 5%

Filed under FHA Interest Rate by on December 16, 2009 at 11:21 am {no comments}

It’s been an interesting week for the rates.

We’ve had every piece of bad news that mortgages could hear:

  1. The economy is rebounding.  We’re seeing expansion in nearly every key metric.
  2. Housing is on a roll.  This also has negative signals for the FHA .
  3. Inflation is starting to creep up.  Inflation equals higher rates.

Still, after all of this bad news and after losing 11 of the last 15 trading sessions, the FHA mortgage rate is still at 5%.  That’s surprisingly great news.

We’re still looking at an odd scenario where the rate is 5% for rates at 5% as well.  That conventional rate requires a 740 FICO for the best rate.  For a buyer with a 700 FICO score, it is actually cheaper to get the FHA loan.  That’s significantly different than just a few years ago.

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FHA Loan Rates Improving Today

Filed under FHA Interest Rate by on December 7, 2009 at 11:02 am {no comments}

Last week saw rates take a bruising after chasing all-time lows right near Thanksgiving.  The was pushed higher, but still opens this week under 5%.

It is hard to keep in context how low mortgage rates are.  We went up .25% and are still below 5%.  That’s great news today.  It’s scary news into the future.

The economic data continues to point towards a slowly rising economy with sporadic pockets of bad news.   Every time that the Federal Reserve says “inflation,” rates go up .125%.

Today’s mortgage rates still sit more than 1% away from their ‘normal’ levels.  If you are looking at refinancing an , this is a great time for it.  If you are looking at buying a home, today’s FHA make it much more affordable than it would be in a year.

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Interest rates starting to correct

Filed under FHA Loan Rate by on December 2, 2009 at 10:07 am {no comments}

We’re seeing some follow-through from yesterday’s big sell-off.  Presently, the GNMA 4% is off about 20 basis points.  That might or might not be enough to move rates a full .125%.

Gold hit another record, now up to $1,207/oz.

The ADP jobs report came in today.   The report was worse than expected in terms of how many jobs were lost, yet mortgage rates are deteriorating.  Right now, the momentum appears to be that mortgage bonds were a little overbought in these past few weeks.  The predictions have to be more heavily favoring rates rising rather than falling.

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FHA Loan Rate Hovers at 4.75%

Filed under FHA Loan Rate by on December 1, 2009 at 11:50 am {no comments}

We’re starting to see a reversal today as the GNMA bond is under pressure.  The Dubai mess is unwinding and appears to be regional.  We’re getting blistering numbers in the housing market.  Add to this the fact that mortgage bonds appear to be overbought, we’re ripe for a reversal.

We’ll start today at 4.75% on a 30 Year Fixed with EXTREME volatility possible.

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Switching to 4.0% Coupon

Filed under FHA Interest Rate by on December 1, 2009 at 8:12 am {no comments}

This is great news.  When we look at , we track a GNMA mortgage bond.

Recently, we’ve been using the 4.5% coupon.  With rates dropping so rapidly, we’re switching over to the 4.0% coupon as that is more closely related to the security that lenders are using to set FHA interest rates.

Mortgage bonds are flat to open today.  It could get a little dicey as fears over the Dubai debacle are subsiding.  With the high quantity of securities bought during this recent flight to safety, we could have a situation where the rate could correct pretty quickly.

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FHA Interest Rates Almost 2 Points Lower

Filed under FHA Interest Rate by on November 30, 2009 at 12:37 pm {no comments}

It’s been an incredible month for the .

Today, we’re looking at the 4.75% 30 Year Fixed Rate.

On October 16th, the discount points required to buy the loan down to 4.75% was 1.82%.

As of today, it’s…..0.000%.

This is a staggering 182 basis point run in just 45 days.  On an average loan of $250,000, this is a whopping $4,550 in reduced closing costs to end up with the same low rate of 4.75%.

We’re currently at the best rates of all time.  Even one year ago when conforming rates dropped, the comparisons were not this even.  We’re now only seeing a spread of .125% between the two rates and the comparisons increasingly favor FHA when either of two conditions is true:

  • Credit score is below 720
  • Down Payment is less than 10%

Under either scenario, you’re looking at sub-5% rates but long-term savings typically lean towards the .

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FHA vs Conventional – Up-front Costs

Filed under FHA vs Conventional by on November 28, 2009 at 9:12 am {no comments}

Both the 30 Year Fixed Conventional and rates dropped even lower this week.  These rates are now pressing against some of the best rates of all time, set almost exactly one year ago.

FHA vs. Conventional

We’re going to look at another comparison.  We’ll focus on a 700 FICO score, 5% down payment, and we’re assuming a single-family residence.  We’ve used a price of $300,000 for both examples.

Monthly Payment

FHA vs Conventional Monthly Payment In terms of monthly payment, the FHA mortgage nearly always is cheaper for the 700 FICO score borrower.

This is largely because the PMI is .94%.  That should be read and referred to as a percentage.  Since the FHA PMI is only .5% in this scenario, the conventional loan’s effective rate is roughly .3% higher.  The Conventional PMI is .44% higher and the interest rate is .125% lower.   Jump to the end of the article for the full data.

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FHA Interest Rates Open Below 5%

Filed under FHA Interest Rate, FHA Loan Rate by on November 23, 2009 at 12:07 pm {no comments}

Another interest week as mortgage rates have a lot of information—in a very compressed holiday week.

  • Today:  Existing Home Sales, Up 10%+.  Homes are selling!!
  • Tuesday:  Consumer Confidence, Home Price Index, Fed Minutes
  • Wednesday:  New Home Sales, Personal Income and Outlays

The events that would cause the FHA to go up are more likely than the events that would cause mortgage rates to go down.

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FHA Interest Rates Continue Trend

Filed under FHA Interest Rate, FHA Mortgage Refinance by on November 16, 2009 at 6:50 pm {no comments}

Last week brought a third-consecutive week of rate improvement.  On the heels of a dismal University of Michigan Consumer Sentiment report on Friday, rates followed through and finished off the week strong.

We go into this week with a few key readings, namely, the CPI and PPI.

Current Status: Inflation Low. Rates Low.

If that current status shows inflation is heating up, rates will jump.

This week also welcomes the new FHA Streamline Refinance changes and that brings on a new world to the .  The new FHA loan requirements on the refinance are essentially “normal” on the “streamline” refinance.

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FHA Loan Rates Below 5%

Filed under FHA Interest Rate by on November 13, 2009 at 10:58 am {no comments}

The continues to trend lower.   Mortgage rates plunged through the 5% mark and are sitting at their best levels, in the FHA products, in quite some time.

The much-loved FHA Streamline Refinance program has big changes coming next week.  Beginning November 17, FHA Streamline Refinance applicants will need to evidence:

  • Income
  • Verification of Employment prior to close
  • Assets to cover the cash-to-close.

Further, the FHA is limited loan-to-values to 97.75% for homeowners that want to “roll closing costs” into their mortgage.

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