At the moment, FHA mortgage rates have hit its historical low. Now is the chance for you to secure an FHA loan interest rate that will work to your advantage. Therefore, if you are thinking of buying mortgage at the lowest FHA interest rates that you can possibly have, then you can compare all down payments and closing costs and make the deal. Read on for more information on how you can secure the lowest.
You might wonder why it is lower than the conventional mortgage. Truth is the mortgage interest rate is really lower when you compare it with the other conventional mortgage. The FHA or the Federal Housing Administration is a deferral agency that helps by offering federal housing loans with those who would want to have their own homes but are having a hard time doing so because they are low to moderate income families.
The FHA loan interest rate however depends on the credit score of the individual. In that way, this lowers the risk for the lenders. As a result, they offer rates that are lower than the conventional mortgage but they still protect themselves from not getting paid in the long run. The advantage is that you are given the option to buy down if you qualify for it. Let’s say in a 2-1 buy down, you can actually decrease the initial FHA mortgage interest rate by 2% during your first year. Then this becomes 1% in the following year and then 0% after that.
If you want to buy down the mortgage, then the fee through the form of discount points is also charged. The discount points are lower than your loan interest and these are treated as some kind of interest that is pre-paid. Let’s say that you wish to lower your FHA loan interest rate, you can do so on a 6% to 20 year mortgage. This would reflect that you were able to make an FHA loan interest rate that had 4% on your first year, 5% the following year, and then 6% in the years that follow.
You are also given the option to buy down your FHA loan interest rates. If you choose to do so, then the borrower pays the discounted points as well as the lower interest rates of your mortgage that has been carried over to your current loan. The loan rate does not make any difference. A permanent buy down in FHA loan interest rates is recommended if the seller wishes to pay down while the buyer is occupying the property for at least three years.