Understanding Mortgage Rates | dripp inc | Home Equity | Refinancing and Remortgage Guide

Why FHA?

If you have been qualified at a higher rate than you expected or denied because of your credit a FHA (Federal Housing Administration) mortgage may be your little known savior.  FHA loans are guaranteed mortgage loans that are backed by the government.  Since the U.S. government guarantees these loans the mortgage rates are (many times) better than if you took out a conventional loan. 

Here is a checklist you can use to see if FHA is an option suitable for you.  If any of the following statements about you are true a FHA loan may work for you.

• I have a high Loan to Value (loan amount divided by the value of the home exceeds 70%)
• I own a Multi-Family home
• I want to take Cash-out
• I have less than perfect credit
• I had a recent Bankruptcy
• I want to add a friend or family member to the mortgage who does not live with me to help me qualify for the loan
• My current rate has adjusted and I can not handle the new mortgage payments
• I am a First Time Homebuyer
• I don’t have a lot of money to put down on a purchase

(FHA was originally created in 1934 to help the housing industry recover from The Great Depression.  Today FHA programs are being used to help the housing industry out of the credit crisis.)

Good Afternoon,

Yesterday marked the end of the 3rd quarter, which can only be described as one of the most historic and volatile on record. While history will not treat this kindly, I trust we have all learned significant lessons. A key economic report from the Institute for Supply Management reflected its manufacturing index fell to a reading of 43.5, a significant decline. This indicates manufacturers are receiving fewer orders for products as businesses curtail spending. The next important data scheduled this week is the non-farm payroll report, which is projected to show another decline in jobs—this time 105,000. And now that the 3rd quarter is over we look forward to earnings announcements, which I am sure will not be as rosy as may have been projected. What investors will also be keenly aware of are the projections for the 4th quarter and next year. At this writing bonds are improving, with mortgages better by approximately .50% and the equity markets are lower.

If you missed the window of opportunity, the time to act is now, if you have an adjustable or a rate higher than 6.25%. Many FHA loans are outperforming their conventional counterparts.

With major banks raising their lending rates overnight, mortgage rates we are used to seeing will disappear due to the credit crunch. It will cost consumers even more to borrow to eliminate that adjustable, or to consolidate their debt.

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