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Do FHA loans generally have higher interest rates than other loans?

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June 25 2009 - Ahwatukee Foothills
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Answers (8)

MDellosa
It is unfortunate that your lender was not on the his/her game. A lock could have been administered prior to an updated paystub in all scenarios. in there defense Interest rates did climb to the higher end of 5% and did so rather quickly. However, they should have been watching rates daily in order to secure the rate that they quoted you intitally. At this point I would have your file submitted, approved and ready to go for the opportunity of rates falling below 5% once again. Either way, to maintain a positive experience as purchasing your first home...keep in mind that 6% is a great rate and still at a 45 year low. I have been in the industry for 18 years and i remember when rates were 11%-13% where most could not afford their first home. Congratulations!!! and enjoy.   
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July 06 2009
No problem.  Would likely suggest looking at applying for a streamline with a different loan officer (since the first one moved the rate up on you, no need to reward that type of behavior).  Don't want to jinx anything but rates may be headed back down a little bit and if you have the ability to bring closing costs to the closing you may be able to drop that rate down to 5% in the near future.





 
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June 25 2009
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Thanks Nic.  Loan amount is $168,000.  The house appraised at $175,000.  Purchase price $172,000.

I closed last Thursday.

I too was shocked that it was 6%.  Initital conversations in late May (when rates were lower) and I was being quoted at 5%.  Then it went to 5.5%.  And suddenly I was locked in at 6%.

As a first time home buyer, this whole process left me with a bad taste in my mouth.  Any other advice you could provide me or next steps would be much appreciated.
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June 25 2009
Nope that's not the reason.  What was the loan amount?  If it wasn't pretty small there is no reason for that high of a rate (besides the LO's greed that is).  You should be able to streamline it with today's rates down to 5.25%.  Though if you don't do an appraisal you will likely need to bring some funds to closing because new loan cannot exceed original loan amount.

Keep an eye on rates and if you can get down to 5% or below again it may be worth your while to take a look at refinancing.
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June 25 2009
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Thanks for the quick response.  I closed last week.  It was a 30-day close and rates kept going up.  I was missing a recent pay stub and had to reprint it from my work and the lender said I couldn't lock in a rate until I turned that pay stub in.  By the time I did that, it was 3 days before the closing date and the lender was "forced" to lock me in at 6%.  Not sure if this is the norm, but it didn't feel right.  I was just curious since it was an FHA loan if that's why the rate suddendly went so high.
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June 25 2009
No in fact many times they are less than conventional.  
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June 25 2009
No, they are very competitive with conventional rates. 
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June 25 2009
Not really, what are you being told?   What rate are you being offered?



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June 25 2009
 
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