Current FHA Mortgage Rates Are Low – Can You Take Advantage?
Unless you’ve lived somewhere outside the US, you know that current FHA mortgage rates are low, very low; all current mortgage rates are. They look like they’re going to be low for a long time. How do you take advantage of this situation?
If you can’t take advantage of the current FHA mortgage rates now, here are 10 things you can do to put yourself in a position where you can benefit from the very low FHA mortgage rates that are going to be around for a while.
Get a Mortgage Rate That’s Close to The Low Current FHA Mortgage Rates
1. Check your credit, remove mistakes, improve scores
Credit reporting bureaus are far from being perfect. Check on them, don’t let them get between you and the current FHA mortgage rates.
In my case, they once reported me late for months on a credit card with a limit of $5. Yes, $5. Worse, a card I never had. They also reported a credit card I had closed 3 years prior as open, with a $5,000 and change on it, which was close to the limit, and bringing down my scores.
I had those mistakes fixed, my score went up 70 points. 70 points meant thousands of dollars less in mortgage payments each year.
2. Build a steady employment record
FHA insured mortgages are for people with imperfect work or credit histories. But if you’re able to show that you’ve worked continuously for the past 2 years, your mortgage rate will be a lot closer to the current FHA mortgage rates.
3. Build a bill-paying history that shows you’re pay on time
If you pay on time for 12 months, you make FHA happy. But that’s the minimum. If possible, show more. The point is not to merely qualify for an FHA-insured loan but to take advantage of the low current FHA mortgage rates. That means, getting a mortgage loan with a low interest rate.
There’s a big difference between 5.15% and 7.25%, for instance. Specifically, $546 monthly payments vs. $682 monthly payments. Or $96,569 in interest over 30 years vs. $145,583 interest over 30 years.
4. Live on a budget
Create a budget and live according to the budget, making sure there’s money left over for the future mortgage payments. You can use that to show prospective lenders that you can do it.
5. Select your home target price
Once you’ve got your budget and you know how much you have left for mortgage payments, insurance, utilities, you can figure out how much house you can afford to buy.
FHA allows you to borrow up to 96.5% of the value of a home. That doesn’t mean you have to borrow that much. As a matter of fact, if you put up a bigger down payment you might get a lower interest rate. Might even be as low as the current FHA mortgage rates you see advertised in your area.
Dropping the interest rate from 7.25% to 7%, for instance, lowers your mortgage payment by $36 dollars a month for every $100,000 you borrow.
6. Save for the down payment
Again, the bigger the down payment, the lower the interest rate you’ll get, the lower your monthly payments.
7. Check current FHA mortgage rates again
When you’re ready to buy, Google ‘current FHA mortgage rates’ and use whatever rates exist that day to run your numbers again. If everything looks promising, look for a mortgage broker.
You could talk to your bank too. But, usually, mortgage brokers are able to get you a better rate than your bank can. Banks tend to have one rate for their customer and a lower rate when they sell mortgages wholesale (which is how mortgage brokers get them for you).
It’s not rocket science, but you need to do it and not fail, not even once, if you want your mortgage rate to be close to the current FHA mortgage rates.