What's Happening with Today's Market and FHA Mortgage Rates?
The FHA was established in 1934 and has since provided loans to over 35 million borrowers, which is more than any organization. But you should understand that the FHA doesn't actually give funding, it simply insures loans. FHA makes it safer for lenders to grant loans because they know that the FHA will pay off whatever is left should you default.
In 2006, President Bush was able to convince Congress to pass a modernization proposal for the FHA that made it possible for families in need to purchase homes. The mortgage rate for the FHA was just 5.5 percent when the proposal was passed. (Here's a quick peek at the rates for those looking to compare mortgage loan rates. Current FHA mortgage rates dictate that the interest rate is 6 percent for a 30 year fixed loan with 1.875 points. You will also get an interest rate of 6 percent for a 15-year fixed loan, but the points will only be 1.25.) There are a few reasons why an FHA loan could your best option as a borrower. First, to qualify for the loan you do not need to have high quality credit. Lenders are now much more strict about who they lend to, thanks to the sub-prime lending mess. Average and even above average credit just won't be enough to get a loan now. Considering other things like your income, debt-to-income ratio, and a few other things, you might still be able to qualify for an FHA loan.
Bankruptcy can also be a factor that holds people back. As long as there are other favorable factors, FHA loans will still consider individuals who have a previous bankruptcy. If you are really concerned about whether you will get financed or not, and you have poor credit or a bankruptcy on record, then you need to get debt consolidation services and/or get debt management. Usually people are able to improve their credit rating, as well as take the right steps to improve their debt-to-income ratio.
Typically, FHA loans require a much smaller than typical down payment to get the loan. This is usually seen as an added benefit for many borrowers. Even for those that have more money to use as a down payment, it can often make more sense to use that money for growth by finding investments that give a good return.
FHA loans are meant to help responsible and deserving individuals purchase their very own homes. This is one of those U.S. government programs that actually does what it's intended to do.
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