Its been a while since I have posted any rate updates. Mainly because we have been so busy growing and keeping up with our volume. Rates have remained very low thanks to the Federal Reserve’s purchase of mortgage back securities.
We have seen a pattern emerging of the last few months that each time the Fed starts buying Mortgage Backed 4.5% – 5.0% for FHA Fixed Rate loans making it possible for most homeowners to save money by refinancing. We even wrote a few 4.25% rates last week (with discount points) for a few borrowers who want to lock in the absolute maximum savings while rates are low.
Week of April 20th, April 21st, April 22nd, April 23rd, and April 24th Mortgage Rate Synopsis/Forecast.
FHA 30 Year Fixed Mortgage Interest Rate: 4.5 – 5.0% depending on credit score and points paid.
Conventional 30 Year Fixed Mortgage Interest Rate: 4.25% – 5.5% depending on credit score, loan to value, transaction type and points paid.
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As default rates on FHA Loans continue to soar, most lenders have once again raised credit score requirements. Last year we saw FHA minimum scores set at 580, and now they have been raised to 620. I think its important to note that FHA is not setting these minimum scores, but the lenders who make the FHA Insured Mortgage Loans.
According to the March 2009 HUD Neighborhood Watch Data, 8.16% of FHA Loans Originated in Florida over the last 2 years are 90 days past due as of December 2008. This is up from only 1.81% in June of 2006, a 4 and 1/2 times increase.
An additional 11.63% of all FHA Loans in Florida are currently 30 or 60 days past due, but have not yet hit 90 days to be considered “in default”.
The major FHA Servicers are taking serious steps to try and get defaults under control. In addition to the new 620 credit score requirements, many have cut off loans originated by mortgage brokers. We have also seen restrictions on borrowers with no credit scores, reduction in cash out loan to values and restrictions on higher debt to income ratios.
I am sure there are a few lenders left out there taking FHA Loans under 620 score, but expect to pay a higher rate and jump through a lot of extra hoops to obtain an approval. If you have a 580 credit score and are trying to buy a home or refinance with an FHA Loan, your best bet is take steps to try and improve your credit score.
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