Articles in Category: Fixed Rate Mortgage

January 19, 2016

Mortgage Loan Interest Rate Trends: 180-Day Lows

Ahead of the three-day weekend, Friday saw mortgage rates break some new ground–rates that, best execution, we havent’ seen in quite some time. Rates broke the four percent zone and began moving lower for both conventional and FHA mortgages. How long this trend may last remains to be seen, but some sources report oil prices and stock market woes as being responsible for at least a chunk of the improvement in mortgage rates we are seeing at the time of this writing. 30-year fixed rate conventional mortgages left the four percent range altogether and headed into best execution territory at a range between 3.75% and 3.875%. On many days where there is improvement, FHA mortgage rates tend to lag behind and remain in a comfort zone (3.75% has been the | more...

January 14, 2016

Mortgage Rate Trends: 60-Day Lows Holding

By Joe Wallace

For the past five business days, we’ve seen mortgage rates moving lower than they’ve been in about eight weeks. Some industry professionals are calling it a rally. Whatever the label, we’re seeing mortgage loan rates moving to the (best execution) rock-bottom of the four percent range or lower depending on the lender. 30-year fixed rate conventional mortgages are, best execution, most aggressively offered just under the four percent range at the time of this writing, while FHA mortgage loan rates are still holding steady at a best execution 3.75%, though you will find greater variation among participating lenders than with conventional mortgage counterparts. The causes for this rally include tough days for certain types of trading–to those not accustomed to watching mortgage rates it may seem like a contradiction that | more...

January 13, 2016

FHA Home Loan Questions: FICO Scores

By Joe Wallace

A reader got in touch recently in the comments section to ask a question about FICO scores and FHA home loan applications. “My new wife’s credit score is 749 and mine is 620 due to an ugly divorce and transfer several years ago. We make over 287K per year with very little debt. Would we qualify for a loan together with a favorable rate? All debt paid except car loans.” This question implies that FICO scores are the deciding factor for an FHA loan approval decision, and while credit scores are very important, they are not the only factor taken into account by the lender. When you apply for an FHA home loan, the lender will examine not just your FICO scores, but your history of payments–especially those made in | more...

January 11, 2016

Mortgage Rate Trends: Lower In Spite Of Jobs Report

By Joe Wallace

On Friday, mortgage rates moved lower in spite of a scheduled economic data release (Friday’s jobs report) that showed a more robust job market. That news has in the past had the power to negatively affect mortgage loan rates–good economic news often comes out to the detriment of mortgage rates depending on investor reaction to that data. On Friday rates moved lower due to other economic factors including market woes in China and declining oil prices. Investor behavior in reaction to those factors had more of an influence on Friday than the jobs report. That’s not unusual in the grand scheme of things. Much depends on what factors hold investor attention on a given day. On Friday the jobs report was not (but easily could have been) the main event | more...

January 8, 2016

FHA Loan Rules: When Landlords Sell To Tenants

By Joe Wallace

Sometimes when a borrower wants to buy a property with an FHA mortgage, it’s a situation where the applicant has been renting for some time and has an offer from the landlord to purchase. FHA loans do permit these transactions but there are special rules that govern them. These rules, published in HUD 4000.1, state that in some cases a higher down payment is required. But in others an exception to that requirement is possible depending on the relationship between landlord and tenant. The higher down payment requirement is needed because tenant/landlord sales can fall under something known as the “identity of interest” rule, which requires a 15% down payment in cases where identity of interest applies. According to HUD 4000.1: “The maximum LTV percentage for Identity-of-Interest transactions on Principal | more...

January 7, 2016

FHA Loan Down Payment Requirements

By Joe Wallace

A recent question in our comments section asked if the down payment for an FHA home loan could be financed, or does it need to come “out-of-pocket”. This is an important factor for FHA single family home loans as there is what the FHA describes as a “minimum cash investment” or down payment required that a potential FHA home loan applicant will need to budget for. That down payment is, at the bare minimum, 3.5% of the “adjusted value” of the property. This is stated in HUD 4000.1 which says specifically: “Minimum Required Investment (MRI) refers to the Borrowers contribution in cash or its equivalent required by Section 203(b)(9) of the National Housing Act, which represents at least 3.5 percent of the Adjusted Value of the Property.” This must be | more...

January 5, 2016

Mortgage Rate Trends: 14-Day Lows

By Joe Wallace

On Monday we reported that mortgage loan interest rates had moved slightly higher to close out 2015–rates for 30-year fixed rate conventional mortgages ended the year in a range between 4.125% and 4.25% (best execution) and 2015 rates for FHA mortgages closed out at a best execution 3.75%. On the first day back from the New Year’s holiday, mortgage rates lost no time regaining some of that lost ground. Mortgage rates for 30-year fixed rate conventional home loans are now in a range between 4.0% and 4.25% (best execution). FHA mortgage loan rates did not move out of their best execution comfort zone of 3.75%, though if there is sustained improvement we could see rates for FHA mortgages shift into a range rates with the current best execution rate at | more...

January 4, 2016

FHA Home Loans, Domestic Partnerships, And Identity Of Interest Transactions

By Joe Wallace

Recently a reader got in touch with us in the comments section to ask the following question about FHA loans, identity-of-interest transactions, and whether a domestic partnership could require additional consideration for assuming an FHA loan or applying to buy a home from a domestic partner: “I have lived in a residence with my boyfriend for the last 3 years. He currently owns the property and is going to be moving. I would like to stay in the residence and purchase his home from him. I have resided here rent free (on paper anyway no lease agreement). He has paid his mortgage, while I have paid all of the other household expenses (utilities, groceries, etc). Question #1: Am I considered a tenant of the property even though there is no | more...

January 4, 2016

Mortgage Loan Rate Trends: Closing Out 2015 Higher

By Joe Wallace

In the last week of 2015, we saw mortgage loan rates creeping higher, staying above the four percent mark for 30-year fixed rate mortgage loans. A holiday week can keep rate movements conservative, and two holiday weeks in a row can make things quite calm, but that quiet did not prevent the upward drift of rates. 30-year fixed rate conventional mortgages closed out 2015 in a best execution range between 4.125% and 4.25%. FHA mortgage rates, in spite of the upwards creep we’ve seen in the past two weeks, did not move from their best execution comfort zone of 3.75%. That best execution rate tends to vary more among participating lenders than with conventional loan equivalents, so your experience may depend on the lender. Additionally, best execution rates are not | more...

When Is An FHA Loan Better Than A Conventional Loan?

December 31, 2015

FHA Loan Rules In HUD 4000.1 On Closing Costs, Discount Points

By Joe Wallace

FHA loan rules in HUD 4000.1 include some instructions to the lender about closing costs, discount points, down payment funds, and much more. Can a borrower use closing costs as part of his or her down payment? What does the FHA rulebook say about interest rate lock-in fees? There are many rules and regulations–borrowers and lenders alike should be familiar with the guidelines. For example, when it comes to the down payment question, FHA loan rules are clear that the down payment money is a separate and distinct thing from closing costs. Specifically, HUD 4000.1 states: “The Mortgagee is not permitted to use closing costs to help the Borrower meet the Minimum Required Investment (MRI).” So that means an FHA borrower will need to budget for both closing costs and | more...