FHA Dwelling Mortgage Mortgage Charges
First-time borrowers sometimes ask what is a mortgage rate for FHA home loans? The FHA loan rate is the interest rate that you negotiate with the lender on a 15- or 30-year FHA mortgage. There are some facts you should know about FHA loan rates that make understanding these rates a lot easier.
FHA loan rates: They vary depending on the lender
Technically, the mortgage loan interest rate on your loan is determined by the loan officer based on current market rates and other factors.
Who will get the most competitive FHA loan rates? Those who meet the FICO score standards and the other financial qualifications of the lender.
Because the prices are negotiable, discount points can be bought – an option that you and the participating FHA lender should discuss as early as possible.
Buying discount points makes sense in some scenarios and makes no financial sense in others.
We’ll get back to the discount points in a moment, but it is very helpful to know that the FHA and the HUD do not set or regulate any FHA loan rates other than the requirement that the interest rates on these home loans be reasonable and “customary” negotiated in this size housing market. HUD doesn’t tell lenders how to set their interest rates differently.
Buying Your Mortgage Loan Interest Rate
Do you remember the discount points mentioned earlier? Your home loan interest rate can be lowered by purchasing discount points. These points are prepaid by the borrower and each point is worth 1% of the total mortgage.
Discount points should not be bought lightly. If you are planning to sell the home, you may not be able to take a break by buying points. Buying points is better for borrowers who know they will be staying for the duration of the loan or near the home. Those who sell the house and move on in a few years’ time should save their money on points and choose not to buy them.
FHA Lending Rates: Varies depending on where you’re looking
FHA loan rates vary between participating lenders. This is typical no matter what type of mortgage you are looking for, FHA, VA, conventional, etc.
You may find some lenders who offer higher interest rates than you expect. You may also come across some that have lower interest rates but higher closing costs.
Either way, your FICO results play a very important role in the interest rates the lender can offer.
And that is why we recommend that you buy an FHA loan. This is an important part of being an informed borrower.
Some participating FHA lenders may be willing to offer you rates not available from a competing financial institution. Regardless of how high the interest rate actually is, this interest rate can only apply for a limited time.
Because of this, borrowers and lenders negotiate a mortgage freeze. An interest freeze is a written agreement that sets a specific mortgage rate with a start date and an expiration date.
You won’t be able to get a mortgage rate lock without committing to purchase a specific home. So keep that in mind when trying to decide between properties. You will only begin negotiating the tariff in earnest when you are ready to make an offer to buy.