The FHA EMM is a very underutilized program and is used to cover the cost of home energy improvements. According to HUD, residential energy costs in the U.S. totaled over $201 billion in 2005 with over half of that, $114 billion, spent on running furnaces, air conditioners and hot water heaters. The FHA EMM is perfect for the home that is in need of energy efficient upgrades and savings from utility costs. Even though over three-quarters of the national residential energy expenses come from owner occupied single family residences, only 1,100 FHA Energy Efficient Mortgages were done in 2007. Just about any borrower who qualifies for a regular FHA203b or FHA203k loan can apply for an FHA EEM. The FHA Energy Efficient Mortgage is for new and existing homes and can be used for purchase or refinance. As with all FHA loans, it is provided by the lender and insured by FHA.

In order to qualify for an FHA EEM, the costs of energy improvements and the estimate of savings must be determined and reported by a Home Energy Rating Systems (HERS) or an energy consultation. The costs of the energy inspection and any related fees can also be included into the mortgage. To qualify, the cost of the improvements must be less than the total dollar value of the energy saved during the life of the completed upgrades. The amount of the FHA EEM is determined by the cost of the effective energy improvements plus the cost of the report and inspections OR the less of 5% of the value of the property or 115% of the median area price of a single family dwelling or 150% of the conforming Freddie Mac loan limit. The money is placed in escrow and released to the borrower only after an inspection verifies that improvements have been installed and energy savings will be achieved.

Another benefit of the FHA EEM is that qualifying debt to income ratios are extended to 33%. This ratio is based on the mortgage amount without the FHA EEM energy package. The upfront mortgage insurance premium is also calculated on the base mortgage amount without the EEM package. With higher DTI ratios, borrowers can qualify for a higher FHA mortgage or a larger home. FHA allows this because borrowers will save more money with utility expenses after the upgrades to the home than the increase to the mortgage amount. With today’s FHA 30 year fixed rate is 3.875% (0.7 to 1 point), this could turn out to be a great savings for FHA borrowers.

As the real estate market continues to be flooded with foreclosures and short sales that are in need of upgrades, home buyers could benefit tremendously with an FHA Energy Efficient Mortgage. With so many home purchases and refinances with FHA loans without this feature, it seems unreal that they have been offering the EEM nationwide since 1995. Still today, borrowers can save money with an FHA Energy Efficient Mortgage at low FHA rates as FHA continues its commitment to consumers and home ownership.

FHA loan rates, just like the interest rates on conforming Freddie Mac and Fannie Mae insured mortgages, are driven primarily by mortgage-backed securities prices, which continue to do well during this tough time for the global economy.

FHA loans have a minimum down-payment of just 3.5% required in most cases, making them most popular among those purchasing a home.

The government is making moves presently to reinstate the home-buyer tax-credit, which was previously applicable toward closing fees on an FHA loan, helping to limit the out of pocket for consumers purchasing.

Despite rates as low or lower than those of conforming mortgages, you’ll notice the APR on an FHA loan is much higher. That’s because of MI, which is 2.25% of the amount financed and charged at closing much like an origination fee, as well as other FHA fees not charged on conventional mortgages.

Despite tigher FHA underwriting guidelines, FHA loans remain available with minimum down-payments of just 3.5% making then the preferred loan for purchasing a home at a time when consumers want to keep as much cash on hand as possible.

FHA mortgage rates are unchanged today. MBS prices, which drive conforming and FHA loan rates, are up today +7/32 (FNMA 30-yr 4.0 at 99.22).

FHA 15-yr fixed loans remain available at 4.5%, and the FHA 5/1 ARM at 3.75.

Despite somewhat lower interest rates for FHA mortgages, APR is much higher because of higher fees. MI, a premium charged at closing of an FHA loan was boosted from 1.75 to 2.25% of the loan amount on April 5th.

Home-buyers have just until the 30th of this month to take advantage of an up to $8,000 I.R.S. tax credit, which on FHA loans is applicable toward closing fees.

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15-yr fixed rates also moved up, to 4.25% from 4.125. That rate is available on conventional (conforming a.k.a. Freddie Mac FRE, Fannie Mae FNM insured) mortgages, while 4.5% remains the FHA 15-yr fixed rate.

5/1 ARM rates for both conventional and FHA mortgages moved up to 3.75 from 3.625 today.

Jumbo 30-yr fixed mortgages are still available at 5.625% to the best qualified consumers.

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The reason for the spike in rates today was a significant drop in mortgage-backed securities prices. MBS prices drive mortgage rates in the opposite direction.

The benchmark 10-yr T-yield, used to forecast mortgage rates, shot up to 3.83%.

It’s very possible this trend (rising rates) could continue leading up to the stoppage of government purchasing of these securities, set for Mar. 31. The Fed says that ideally following the stoppage we will see only a slight increase in mortgage rates.

To display mortgage rates for the visitors of your website use our mortgage rates widget.

Looking for the lowest FHA mortgage rates today? Search local FHA mortgage rates here.

Though not very popular, the FHA 15 year fixed rate is very low at 4.5%. It’s the only rate that is not identical to conforming mortgage rates at this time (4.25%). The FHA 5/1 ARM rate is at 3.625%.

To display FHA loan rates on your website or blog use our FHA mortgage rates widget.

The Fed’s Beige Book revealed a ‘modest’ improvement in the economy in 9 of 12 regions. The data’s effect on mortgage rates was limited. Mortgage-backed securities prices, which drive mortgage rates in the opposite direction, are up +5/32 (FNMA 30-yr 4.5 at 101.08). As a result of the gain in MBS prices it’s possible lenders’ will re-price favorably this afternoon. That means whatever it may have cost yesterday to secure a 4.75% 30 year fixed mortgage, it’s likely to be a little less today.

The benchmark 10 year treasury yield, a leading indicator used to forecast mortgage rates, is at 3.61, up +0.01 on the day. The yield dipped below 3.2 when 30 year fixed mortgage rates reached 4.5% late last year.

Looking for the lowest current mortgage rates? Search local mortgage rates here.

The current conforming 30 year fixed rate, as stated above, remains 4.75% down from early last week. The current conforming 15 year fixed rate is 4.25%. The current conforming 5/1 ARM rate is 3.625%, down an 1/8 from early last week.

Current FHA mortgage rates the same as current conforming mortgage rates with the exception of the FHA 15 year fixed, which is at 4.5%. FHA loans come with MI and other FHA fees which make them far more expensive despite origination (points) being the same.

FreeRateUpdate.com researches over 2 dozen wholesale lenders’ rate sheets to determine the most accurate mortgage rates. All mortgage rates mentioned in this article are available to well-qualified borrowers with about 1 point origination.

To display current mortgage rates on your website or blog use our mortgage rates widget.

Looking for the lowest FHA mortgage rates? Search local FHA mortgage here.

FreeRateUpdate.com researches over 2 dozen wholesale lenders’ daily to determine the day’s rates. The rates we report are referred to by those in the mortgage industry as “par rates”. Our rates are the rates on any given day that are associated with about 1 point origination. These are the real mortgage rates and are often at least 1/4 below national averages reported by Bankrate.com RATE and Freddie Mac FRE. Consumers often accept rates 1/4 above what they are well qualified for because they are not aware better rates are available.

FHA Mortgage Rates Lower but Fees Higher

It’s important to remember when obtaining and FHA mortgage that you’ll be looking at higher fees. FHA charges it’s own fees that are included in closings costs no matter what bank and or broker you’re working with. One of the fees, MI, is the equivalent of about 2 points. An IRS home buyer tax credit of up to $8,000 good until April is applicable to closing costs. The tax credit is offered on FHA loans only.

Looking for the lowest current mortgage rates? Search local mortgage rates here.

Low mortgage rates havn’t helped purchase applications. The Mortgage Bankers Association says purchase applications have fallen to their lowest level since 1997.

FreeRateUpdate.com research of wholesale lenders’ rate sheets shows mortgage rates have stabilized at current levels following several re-prices. As a result of the favorable re-prices  30 year fixed rate of 4.75%, down from Monday afternoon when the rate was 4.875%, will cost a bit less than it did yesterday. The current conforming 30 year fixed rate is 4.75%. The current 15 year fixed rate is 4.25%. The current 5/1 ARM rate is 3.75%.

While FHA mortgage rates very slightly from conforming mortgage rates, they are driven by MBS prices as well. As a result FHA mortgage rates have stabilized today. The current 30 year fixed FHA rate is 4.75%. The current FHA 15 year fixed rate is 4.5%. The current FHA 5/1 ARM rate is 3.875%

Current jumbo mortgage rates, for true jumbo loans not falling into the category of jumbo conforming, are unchanged. The current 30 year fixed jumbo rate is 5.75%.

To display current mortgage rates on your website or blog use our free mortgage rates widget

Take that information with caution. A recently raised premium known as MI at 2.25%, paid at closing, as well as fees charged by the FHA jack up costs on FHA loans making their A.P.R. much higher than those of conforming mortgages. That being said, The IRS tax credit of up to $8,000 for home buyers using FHA financing to purchase is applicable to closing costs.

Also though the FHA 30 year fixed rate is the same as the conforming 30 year fixed rate, other products are not. For instance, while the 15 year fixed rate for a conforming mortgage is 4.25%, the FHA 15 year fixed rate is 4.5%.

If you’re considering an FHA loan for the purchase of a home, you may want to consider a higher interest rate. Why? If you go with a higher interest rate you may be able to lower your closing costs and use the cash you keep in your pocket for something else.

To display FHA mortgage rates on your website or blog use our FHA mortgage rates widget.