All You Need to Know About FHA Mortgage Rates
Owning your own home can make you feel secure, but you may need a mortgage to make that dream real. There are several types of mortgages to choose from, including an FHA. An FHA mortgage is one insured by the Federal Housing Administration. Borrowers pay mortgage insurance, which protects the lender should the buyer default on the loan. Although FHA mortgages seem to benefit only the lender, they carry many benefits for the buyer as well.
More Lending, More Mortgages
Perhaps the biggest benefit of FHA mortgage rates is that they allow lenders to offer more mortgages at attractive interest rates. The FHA has endorsed more than 325,000 more mortgages than usual in recent years. As a result, more buyers have been able to invest in homes. Additionally, the increase in FHA mortgage rates led to better financing. Buyers can currently finance a home with just 3% down, versus 3.5%.
Lower Insurance Premiums
Since the 2015 FHA rate cut, lenders have been pushing for mortgage insurance premiums (MIPs) to end once a buyer’s loan reaches 78% of its original balance. Over time, this would drastically lower buyer costs and allow more people to qualify for shorter mortgages with better financing. Lenders hope that, over time, FHA mortgage rates will help the economy recover.