Rates are down today. Today’s comparison mortgage rates with no lender fees are 4.0% on a 30 year, 3.375% on a 15 year and 2.875% on a 5/1 ARM. (click here for details)
Today we are going to go over the FHA loan. Not how it is structured, PMI or any of that good stuff. I have done plenty of videos on that already. Today we are going to actually talk about the large amount of money available for lender credits specifically on the FHA loan.
Check out today’s video:
I am sure you know there is a night and day difference in conventional loans and FHA loans. Not only do they have different guidelines to qualify for the mortgage but very different pricing as well.
Let’s break it down!
I will use a $200,000 loan amount for my loan scenario. You can see that the rate, today, is 4% on a 30 year fixed conventional loan with no lender fees. That is a great rate today and that rate is actually covering about $650 in lender fees so you would not have to pay that in your closing costs. Pretty good deal, huh?
Well, wait a minute. Let’s take a look at the FHA loan today. At a 4% rate today a lender could cover over $5,000 worth of your closing costs and pre-paid items. You heard me, over $5,000! Now in most cases that is just way too much money and you wouldn’t need it all. So you could take an even lower rate with a more reasonable amount of lender credits.
For example: A 3.75% rate on a FHA loan today would still be a lender credit of over $2,800. That’s a nice chunk of change that, you my friend, won’t have to pay for those dreaded closing costs. So if you are in the market for a FHA loan, be aware that your lender credits should be substantial in most cases. If you are not getting any sort of lender credit that means that extra money that should be going towards the reduction in your closing costs is now going to your lender instead. Are you cool with that?
Like I said before, FHA and Conventional loans are very different and it will depend on your specific situation to determine what type of loan is better for you. That is what an experienced loan officer is for. No matter what, make sure you are getting a lender credit at closing and if you are getting an FHA loan make sure it’s a big one! Make sure they put that credit on your GFE, as well. That way it won’t be able to change later.
Let’s change the way people shop for a mortgage…forever!
PS. To ask a question, get advice, or find out if you’re getting the best deal possible on your loan, just post a comment below. Daily comparison rates, calculators, and other cool features are available in the free Rates in Motion LoanApp by going to your smart phone and clicking on this link, activation code is 9203780002