April 2, 2019
There are lots of online lending websites discussing interest rates for mortgage loans. But what do you need to know about FHA home loan interest rates and refinancing?
If you want an FHA Streamline refinance loan, you will be applying for a refi loan that generally requires the transaction to have some tangible benefit to the borrower such as a lower monthly payment or a lower interest rate.
When you shop around for lenders offering the best interest rates, remember that one very important factor applies; until you enter into a mortgage rate lock commitment with the lender, today’s interest rates will not apply to your loan.
In other words, until you have a commitment in writing for the interest rate, daily and weekly rate fluctuations will apply. The mortgage loan interest rate lock commitment you enter into with your lender will protect you against further changes once you have agreed in writing to the rate.
So it’s very important to keep in mind the difference between a marketing tactic (“Look how low rates are RIGHT NOW!) and an actual commitment from the lender in writing (which you sign and agree to) stating “THIS rate is the interest rate you will be charged as agreed upon by lender and borrower”.
Interest rates on FHA mortgage loans, including FHA Streamline Refinance loans, are not set or regulated by the FHA or HUD.
The only requirement from FHA loan rules is that the rates be reasonable and customary compared to similar non-FHA mortgages available on the market at the time.
Home loan interest rates can and will fluctuate. In some cases, this benefits the borrower, in others it benefits the lender.
But once you have agreed to the interest rate lock commitment with your lender, the daily rate changes do not apply to your loan for the duration of the rate lock commitment.
If your circumstances change and you are not able to close your loan before the rate lock expires you will need to renegotiate the commitment with the lender, but this is not a rare occurrence and borrowers should not be intimidated by the prospect.
Discuss your rate lock with the lender if you have questions about the procedure and how it affects your FHA refi loan.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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