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.

WASHINGTON, D.C. – Mar. 2, 2010 – (FreeRateUpdate.com) – It’s about to get tougher to qualify for an FHA mortgage — a government insured, low-down payment home loan often considered the replacement loan for subprime mortgages.

Moving to head off the financial impact of defaulting borrowers, the FHA is adding more-stringent lending requirements and higher fees borrowers must pay to get the federally-insured loans.

Rising foreclosures have gutted the FHA’s reserves, leaving them $45 billion in reserves to cover $757 billion in home-loan guarantees. The cushion is far below the amount mandated by Congress.

RealtyTrac says January’s foreclosures were up 15 percent from a year ago and it could get worse.

“If history repeats itself, we will see a surge in the numbers over the next few months as lenders foreclose on delinquent loans where neither the existing loan modification programs or the new short sale and deed-in-lieu of foreclosure alternatives works,” said James J. Saccacio, chief executive officer of RealtyTrac.”

Because FHA loans are low-down payment loans they come with a requirement that the borrower buy mortgage insurance. That’s because mortgages made for home purchases with smaller down payments have a higher risk for default and foreclosure. When a borrower goes into foreclosure, the action triggers
mortgage insurance benefits that pay the lender to cover the loss.

Before the housing market’s boom-bust cycle, FHA loans accounted for a fraction of all mortgages. Today they account for 30 to 50 percent of all purchase loans in some locations. More loans exposed to risk have drained FHA coffers and forced the federal agency to cut it’s losses.

The latest FHA announcement comes on the heels of an FHA investigation into 15 FHA lenders with high foreclosure rates.

In another risk-reduction move late last year, the FHA proposed stiffer rules for lenders — a requirement to have a net worth of at least $1 million in the first year and $2.5 million within three years, up from the original requirement of
$250,000.

New FHA loan guidelines / FHA loan changes

Bringing risk reduction efforts to the consumer level, effective April 5, the FHA will raise mortgage insurance fees that borrowers must pay, cap the amount of cash that sellers can contribute for closing costs and require higher down payments for the borrowers with poor credit scores.

• The new upfront mortgage premium will cost borrowers 2.25 percent of the loan amount, up from the current 1.75 percent — the second increase in the past two years. The upfront premium can be rolled into the loan. Later, some of the cost increase could be added to a borrower’s additional annual mortgage insurance premium (about 0.55 percent of the total loan amount) which is paid monthly.
• New borrowers must have a minimum FICO credit score of 580 to qualify for FHA’s 3.5 percent down payment loan, otherwise the borrower must put 10 percent down. Most lenders require a minimum credit score of about 620. A credit score is a numerical rendition of a borrowers creditworthiness. The higher the score, the better the credit and the better likelihood of qualifying for the least expensive loan.
• Sellers will only be able to contribute closing costs that amount to 3 percent of the sale price, half the current 6 percent. Experts say the higher maximum encouraged borrowers to mark up the price to compensate for their concession.

FHA loan basics

FHA’s low down payment loans are available for 15- and 30-year terms with fixed or adjustable rates, for those who qualify.

The loans are absent repayment penalties and other “gotchas” that plagued subprime mortgages and other easy-money loans available during boom times.

Typically, no more than 31 percent of your gross monthly income can be used for housing costs including mortgage principal, mortgage interest, property taxes and property insurance (PITI). As much as 43 percent of your income can be used for PITI plus recurring bills. The numbers are sometimes
expressed as 31/43.

Higher ratios of 31/55 and 33/45 are available for specialty FHA loans.

For 2010 loan limits for a single-family home range from $271,050 to $729,750, the higher limit for high cost areas.

The required mortgage insurance, can’t be canceled during the first five years, but is automatically canceled after 15 years or if the loan-to-value ratio of the mortgage falls to 78 percent of the original debt.

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.

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.

Though banks like Wells Fargo advertise an FHA 30 year fixed, at a rather high 5.5% with an APR of 6.245%, FHA mortgage rates have been just as good as conforming mortgage rates for months. Many banks, like the ones on our local mortgage rate search, offer FHA 30 year fixed rates as low as 4.75%.  It’s a given with recently raised insurance premiums, closing costs on an FHA loan far exceed that of a conforming mortgage, but the government tax credit of up to $8,000 available until April can pay a majority if not all the closing fees on your FHA loan.

There’s no doubt it’s FHA loans, with low down payments and low mortgage rates, that have carried the housing market through these trying times. In today’s market, there are very few people that have and or are willing to part with the 20% down payment cash. They key word is cash. Cash rules and it’s unlikely no matter what “steal” is available that a consumer will part with $20,000, $40,000, $60,000,  or more to buy a home with financing requiring 20 to 30% down. Until the housing market is at least at a normal sales volume, down payments aren’t chancing on FHA loans.

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

NEW: Search local FHA mortgage rates. Get results in seconds. No personal info needed.

Current FHA Mortgage Rates at Par:

FreeRateUpdate.com research of wholesale mortgage lenders rate sheets shows no change in today’s FHA mortgage rates over Friday. Today’s FHA 30 year fixed rate at par is 4.75%. Today’s FHA 15 year fixed rate is 4.5%. Today’s FHA 5/1 ARM rate is 3.75%. FHA mortgage rates are historically low and about 1/4% off all time lows.

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

NEW: Looking for the lowest FHA loan rates? Search local FHA mortgage rates.

Why then doesn’t everybody get an FHA loans. One word, fees. FHA recently raised premiums over 2%. PMI, paid by the borrower helps to insure these higher risk loans and as defaults have risen so have fees. Pressure from the government for FHA to keep an abundance of cash on one reason for FHA’s recent premium increase. Another is rising defaults. Because FHA borrowers are generally more risky than Fannie and Freddie insured borrowers the default rates on these loans are naturally higher. All this being said an up to $8,000 government tax credit sure helps. The great thing about this tax credit, it’s applicable to closing fees which are generally paid out of pocket on purchase loans. Some companies, such as Wells Fargo, offer their FHA mortgages at higher rates so that borrowers can absorb some of the fees into the interest rate, saving their cash for the down payment.

To display FHA mortgage rates on your website or blog use our free brand new FHA mortgage rate widget, updated daily and easy to install.

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Mortgage rates have been more volatile then usual. A lot of it has got to do with the changes in the political atmosphere. Before Republican Scott Brown,  the future could be predicted a bit easier. Right now, who knows what’s going to happen. Republicans are blocking Obama’s agenda. Obama said he wanted to freeze spending. Obama’s brand new budget announced after the spending freeze was detailed spends a whole lotta’ green backs. The Treasury is ending it’s buying of mortgage backed securities, credited with driving the mortgage rates down to 4.5%. Where to now? This kinda reminds me of a blind date, those never work out to well. Ed Ferrara’s got you covered though from the morning spike to the stabilization I was comfortably informed and will not lose a minute of sleep to speculation about mortgage rates. Ed reported yesterday afternoon mortgage rates stabilized after it appeared they could reach 5%. Read the fully story here.

NEW: Looking for the lowest mortgage rates? Conduct a local mortgage rate search.

Shelley say it aint so’. (Sane people skip to the next paragraph) – FHA has changed guidelines requiring us less fortunate folks whose credit has been swamped from: maybe a disputed phone bill, a credit card opened with the ex girl friend that the witch ain’t payin on, a few blockbuster videos you sold on Ebay not realizin you had rented them… ya spent the cash n’ now Blockbuster even wants a piece of your pie, the 16 year old girl the lady down the street says is your daughter so you buy her a car yada yada yada one thing leads to another… YOU GOTA’ CREDIT SCORE BELOW 580.

FHA requiring bigger down payments for those with sub 580 credit scores caught a lot of media attention. Sheldon Levene, the godfather of FHA origination, says this news ain’t do a thing to the housing market. Why? Banks haven’t been originating FHA loans for borrowers with under 580 credit scores anyway. It was a phantom announcement! Read the full story here.

NEW: Search local FHA mortgage rates by zip code, program, points and more.

The talk recently surrounding FHA hasn’t been about FHA loan rates, but guideline changes set to take place. One change isn’t really a change at all. FHA recently made a so called change that caught a lot of media attention, a minimum 10% down payment for borrowers with a FICO score less than 580. This change literally has no affect on the housing market as banks hadn’t been offering FHA loans to borrowers with sub 580 credit scores anyways.

FHA Mortgage Rates – 30 year fixed FHA – 15 year fixed FHA – 5/1 ARM FHA

FHA mortgage rates today are down from early last week, according to FreeRateUpdate.com research of wholesale mortgage lender’s interest rate sheets. Current 30 year fixed FHA mortgage rates at par are as low as 4.75% and vary from lender to lender. Current 15 year fixed FHA mortgage rates at par are as low as 4.5%. Current 5/1 ARM FHA interest rates at par are as low as 3.75%. Par rates are rates that typically come with a standard 1 point origination. Other fees including but not limited to PMI on FHA loans apply.

NEW: To display today’s FHA mortgage rate on your website or blog use our free FHA mortgage rates widget.

I just brewed a 10 cup pot, I’m feeling like $275,000 and I’m ready to get back to business. Reviewing Friday afternoon’s actvities, Kathryn Davis wrote an article, not on Friday, actually yesterday, I thought had some real good info. Fannie Mae is doin’ a little something for people actually plannin to live in a home, to get first dibs on these bank owned properties. It’s called “First Look“. Fannie Mae is doin’ this program on their own, so this First Look deal applies to Fannie Mae owned properties only. Investors are going to have to start waiting a few weeks while real people have at it. Read the full story here.

It’s no secret FHA loans are hot. C’mon hardly any mullah down, your credit can be completely swamped, no wonder, it doesn’t take a rocket scientist to figure this thing out. News flash less than perfect credit no money wanting to buy a house guy and gal, new changes to FHA guidelines are on the way. Nick Patton, Supreme Lending’s 2008 Loan Officer of the Year, says in Friday’s piece on FHA Loans, and I quote, “they are wanting to create a tiered down payment structure based on credit risk. ” They is referring to FHA. Read the full story here.

Looking for the lowest mortgage rates? Search Local Mortgage Rates.

Finally, we come to mortgage rates. It was an up n down day Friday to close out a decent week. In the morning rates were up to almost 5%. Then in the afternoon as fast as they rose they dropped like a stone all the way down to 4.75%. Story here. As a secondary market analyst and world renowned mortgage rate guru, people are asking me my opinion on the direction of mortgage rates. I tell em’ getcha swimmies on, check the pool for poop, you might be floating for a while. Anybody asking me this, obviously isn’t satisfied with 4 and 3 4th’s, available today. Matter a fact, the pool might shut down while you’re still floatin in it.

I hope you enjoyed your COFFEE AFTER MIDNIGHT.

Sianara,

The Real Bruno Mckenzie