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I've been comparing FHA rates between three lenders. One lender reduced the quote they originally gave me within the same business day, when I informed them that I found a lower rate else where. I am not in the rate lock period as of yet (30 day lock, I close on May 28th).
The following are my concerns:
1/I live in GA, is the FHA rate standard across the board for the state? the country?. Does the FHA rate work similar to the credit card prime interest rate, where it's set by the federal reserves and the lenders adjust the rate they offer depending on their criteria?
2/ If I choose to proceed with this lender, there is a chance that they will attempt to jack the rate on me when I get closer to closing. I'd like to find a way to independently monitor the FHA rate and compare it to my lender's rate. Soon after I rejected a 5.375 % I was offered a 5.25% yesterday (both quoted by the same lender the same day)
3/If the FHA rate works like the prime rate on credit cards, Does anyone know what the rate was for yesterday?. Hypothetically, if the rate was 5%, and my lender quoted me 5.25% maybe I can monitor the rate in the future and make sure that the lender does not charge me more than 0.25% + the FHA going rate at any particular day... I'm in Georgia if that helps
It is guided by Fed rates, and there are lender variations along with it. Rates do change throughout the day, but there's also some leeway with a lot of lenders as far as "giving" you a better rate at a cost to them. But they'll do it if they want the loan to close. As far as your rate expiring, if that happens that company SHOULD eat the cost to extend your rate. As it is their fault they locked for 30 days and weren't able to complete everything on time. However, if you hadn't gotten documents to them in a timely manor, then you might be responsible (Not trying to point fingers!).
There are some county differences, but as far as my knowledge goes I don't think it affects the rate you can get, only loan amount (further clarification on that would be great).
There are some county differences, but as far as my knowledge goes I don't think it affects the rate you can get, only loan amount (further clarification on that would be great).
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The purchase price is 132k. I will be benefiting from an NSP program that allows for 22% to go toward down payment and repairs. I haven't had the inspection done yet but assuming the repairs are 5k the 1st mortgage loan amount was hovering around 110k.
It's my understanding that the rate will be higher since the CLTV is higher.
Since it's a 30 day lock rate. I'll wait till I'm within the 30 days before closing to monitor the rates.
Since the rates are set by the Feds, and lenders have their own variations. I wanted to compare the 5.25% quoted yesterday at 4:00 pm ET to the Feds quote thus having an idea of what the variations are. Similar to credit cards x point + prime. As I get within the 30 day lock period before closing I can keep track of whether the lender is sticking to the parameters (their quote vs the actual fha rate at the time of the quote.) The reason I'm doing this is because lender 1 offered me a lower rate after I presented them with a quote from lender 2. All three quotes (1st lender quote, 2nd lender quote and 1st lender revised quote) where done in the span of 2 hours. I don't want the 1st lender to go back to the parameters she used when she gave me the 1st higher quote. I want her to stick to the parameters of the second lower quote she gave me. And I don't see any other way for me to monitor this other than comparing the lower quote she gave me of 5.25% yesterday 4pm et to what the federal reserve has at that particular time.
As an exemple if a credit cards offers 2 points + prime. I should expect them (in a perfect world) to stick to that 2 points + prime when I get the card.
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"Mike Johnson stand your ground"
(set 4 days ago)
Location: Glen Mills
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FHA Rate set by Lender
Lenders determine the rate. FHA provides guidelines to be followed by the Lender. Standards in appraisals although they have become more conforming in recent years. FHA provides certain benefits to the Borrower and this is more the purpose of FHA rather than to provide low cost mortgages. FHA can be coupled in some communities with a first time buyer program and therein lies some benefit of a lower rate. Programs such as "The First Time Buyer Program" which incidentally can sometimes be obtained by veterans, widow(er)(s) of veterans and those who have not owned a home in the last three years -- this varies based upon the community offering the program.
FHA assigns a case number to your application. If your lender seems not to be working in your interest you might consider having the case assigned to another lender including the FHA Appraisal done by the prior lender. If they are truly being unfair explain to them you are considering this as a possibility. Some Mortgage consultants have more latitude than others in that they may receive a bolstered commission on larger volumes in a given month. This being the case you may find a gratutitous mortgage officer who can afford to offer you a better rate than another in order to gain this added volume.
One thing you should always do is shop and determine the cost of locking. Most companies offer a free lock period, or a float down or extended lock period at a cost. Loan term and period of lock may cause an adjustment to the rate. The rule of thumb is if you cannot afford an increase in your rate don't gamble get the the rate locked up to the date of closing and insure you get everything asked of you done and documents submitted in a timely period.
At the time of your application you signed a disclosure indicating that you understand that FHA does not set the mortgage rate. It is clear to me already that your lender did not do a perfect job of explaining some key factors to you. Inexperienced loan officers can always cost you money -- never be intimidated and always ask for what you would like who knows you may even get it.
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FHA assigns a case number to your application. If your lender seems not to be working in your interest you might consider having the case assigned to another lender including the FHA Appraisal done by the prior lender. If they are truly being unfair explain to them you are considering this as a possibility. Some Mortgage consultants have more latitude than others in that they may receive a bolstered commission on larger volumes in a given month. This being the case you may find a gratutitous mortgage officer who can afford to offer you a better rate than another in order to gain this added volume...
Good luck in your new home.
A case# assigned to the application and the appraisal transfer are very useful information. Thanks for the input. As for the rate lock. It's a no fee 30 day lock from both lenders. I
When you say FHA rates are set by lenders within guidelines. Are you saying that is not like credit interest rate where it's prime + x points. Is there a base FHA rate that is set by the Federal Reserve and the lender adjusts it per their parameters ? or is it exclusively market driven.
Rates on FHA loans are set just like any other loan program- the open market. The difference is that FHA is guaranteed/ insured by the Fedeal Housing Administration and they are willing to insure loans that are riskier(lower scores and down payments) than the open market would. The FHA sets underwriting guidelines which the lensders must underwrite to to get FHA insurance on the loan.
The Federal Reserve, prime rate, etc etc etc has no direct impact on mortgage rates. The only financial instrument that affects rates is the Fannie Mae 30 year bond.
Rates on FHA loans are set just like any other loan program- the open market. The difference is that FHA is guaranteed/ insured by the Fedeal Housing Administration and they are willing to insure loans that are riskier(lower scores and down payments) than the open market would. The FHA sets underwriting guidelines which the lensders must underwrite to to get FHA insurance on the loan.
The Federal Reserve, prime rate, etc etc etc has no direct impact on mortgage rates. The only financial instrument that affects rates is the Fannie Mae 30 year bond.
Status:
"Mike Johnson stand your ground"
(set 4 days ago)
Location: Glen Mills
938 posts, read 1,228,333 times
Reputation: 617
Clarification on comment Guaranteed/Insured
There is a distinct difference between Guaranteed which applies to VA Funding and Insured which applies to FHA and some Conventional Loans. Guaranty and insured are just like they sound listen: "FHA Insures this Loan" and "VA (The Government) gurantees this loan. Said another way picture buying an auto If the "dealer insures the auto" it is different then the "dealer guarantees the auto". Rates are set by the lender. Competition in the marketplace may lead to variations in rate but it is lender determined. FHA has attempted to make some adjustment to rate based on risk assessment. The Insurers of the product should be the purveyors of risk not the product itself. Rates will not ever and cannot ever temper risk. This has been a long time belief and our market has changed for the worse based upon illogic perceptions that rate can be used to temper risk. There is such a thing as a 30 year misstake which generally is discovered and felt by a portfolio much earlier. A failed loan in a portfolio may take a very large number of performing loans to offset it is income impact. Guarantee and Insured is different in this aspect as Guaranteed Loans will be bought back by the Government $ for $ whereas an FHA Insured Loan is paid by a 3rd party insurer.
The FHA rates are set by the lenders i think.They set specific rules and agreements between their borrowers.The borrower must conform to all restrictions and limitations set down by FHA lender policy--many such restrictions prevent the lender from passing on typical costs of doing business to the borrower.I think they will always consider the capability or the economic standing of their borrowers.It is to protect their interest and the borrowers as well.
FHA follows the same guidelines as regular lenders. The formula is complicated and it shifts.
An old school method we use to gauge if the long rates go up and down is whether the yield on the 10 year treasury note goes up or down.
Yield goes up, interest rates go up. Its not always the case but a good rule of thumb.
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FHA Rate set by Lender
Clarification on comment Guaranteed/Insured
