FHA interest rates are subject to a great deal of fluctuation. If you plan on buying a home in the near future, you want to be sure that your interest rates are low enough to make it worth your while. While the program itself does not regulate interest rates directly, there are some things you can do as a savvy real estate investor to help you get the best deal possible. Here are some tips to help you find the best mortgage for your financial situation.
First, know what you are getting. While most buyers focus primarily on the closing costs associated with buying a home, they should also consider the annual percentage rate or APR. The APR is the standard interest rate you will be charged on your mortgage loan if you buy a home with a conventional loan. The lower the annual percentage rate, the better your interest rates will be when the loan matures. To learn more about interest rates, read “Conventional Mortgages: A Buyer’s Guide.”
Second, understand how adjustable interest rates work. Adjustable interest rates are one of the main reasons that homeowners choose to refinance their FHA mortgage. Because adjustable rates rise and fall, homeowners can benefit from lower monthly payments at times when they need them the most. However, there are disadvantages to choosing to refinance using an adjustable rate loan. First, borrowers may have to pay more money upfront if the loan turns out to be a poor credit choice. Also, by paying more money up front, borrowers give up some of the equity in their home, lowering the value when they try to sell the property in the future.
Third, don’t be afraid to shop around. In the past, the only real choice for many homeowners had to get better FHA interest rates was to move to a different neighborhood or to buy a different house altogether. With today’s lenders, there are a number of ways for borrowers to compare different loans. Many lenders now offer online calculators that can help borrowers figure out the difference between conventional interest rates and FHA rates. Using a mortgage calculator is especially helpful because many potential borrowers aren’t home-owners yet.
Fourth, consider speaking to a mortgage broker. Brokers can shop around on borrowers’ behalf to find the best possible interest rates for your situation. They can also review your credit scores with a view to helping you improve your FHA mortgage. Moreover, lenders will often offer financing for several loans through a single broker. This is helpful because the FHA lender can focus on selling the loan while the broker handles those details that don’t relate to the sale of the loan.
Fifth, consider getting a loan with a fixed interest rate. Typically, borrowers with good credit histories to qualify for competitive interest rates on their mortgages. Therefore, there are opportunities to get to low FHA mortgage rates if you have good credit scores. In addition, when you first take out a mortgage, your lender may offer you a fixed interest rate instead of a variable rate. This means that even if your future income changes, your FHA mortgage will remain relatively stable.
Sixth, keep your credit score in mind when shopping for the lowest possible FHA interest rates. It is possible to have a low credit score but have high interest rates. If you do qualify for such a low interest rate, it is important to make sure that it stays this way. Otherwise, you could end up spending more in the long run than you would on the loan. Therefore, it is necessary to stay abreast of current interest rates to stay on top of your finances.
Finally, many home buyers fail to obtain the lower FHA interest rates they need because of one factor alone–a lack of time. These individuals usually procrastinate because they are busy or because they have urgent financial matters. However, taking the time to shop around and compare lenders is one of the easiest ways to reduce your FHA mortgage costs. If you do your research, you will be able to save money by choosing a lender that has lower rates, fees, and other expenses. This is the single best action you can take to lower the cost of FHA home loans.