Rising Mortgage Rates Impact FHA Borrowers
June 20th, 2007
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If you have prequalified for an FHA mortgage or been pre-approved (there is no standard definition of either term) and not yet bought a home you might want to speak with your lender once again.
The problem?
Loan rates have had a stiff increase during the past month. According to Freddie Mac a typical 30-year fixed rate loan was priced at 6.21 percent on May 17th — and 6.74 percent on June 14th. (In both cases with .4 points.)
These numbers mean that a borrower who qualified for a $200,000 loan a month ago (or any other amount) may no longer qualify for such financing.
Borrow $200,000 at 6.21 percent over 30 years and the monthly payment for principal and interest is $1226.24. Increase the interest rate to 6.74 percent for the same loan amount and the monthly payment grows to $1,295.87. That’s a difference of $69.63 a month or $835.56 a year, not much in some household budgets but enough to change the buying plans for those who qualified a few weeks ago at the absolute limit of affordability and did not lock in a rate.
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This entry was posted on Wednesday, June 20th, 2007 at 3:02 am and is filed under . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
Listen to FHA Loan Pros columnist Peter Miller on American Public Radio:
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October 27th, 2008 at 4:24 pm
FHA financing is now the new subprime. I have recently seen a buyer with a credit score in the mid 500’s get qualified. Although I have noticed the appraisals get much more strict. I just closed a deal where the mortgage company required a second appraisal the day before closing!