Profile picture for Gambleress

I see advertisments for 4.25 FHA Loans

I have 77% LTV and have only been considering a conventional mortgage.   Why are the FHA advertised rates lower?  If they truely are would payment be higher on fha vs conventional if borrowing same amount.
  • February 25 2009 - Oklahoma City
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Answers (9)

Profile picture for SoCal Engr
I'll let the mortgage pros chime in and verify, but isn't there also a mortgage insurance issue with FHA with terms over 15 years?

If that is the case, and you're at 77% LTV, then you might want to go conventional to avoid any MIP, unless you're looking at a term of 15yrs or less.
  • February 25 2009
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4.25 today has over 41/2 points hard cost so the savings would have to be real significant for that to be a valuable investment. In your case the FHA loan amount would be more but the rate might offset the mip (pmi) of an FHA loan. If you took a 15 year FHA the mip may be waived.
4.5 on a 15 year conventional cost a 1/4 extra, on a conv. 30 year a little over 2 points extra and FHA 30 year cost is 2.3 points and 15 year is 0.72 points exztra.
  • February 25 2009
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did you see that advertisement on an infommercial at 3am on the local cable access station? It may have been on just before the male enhancement infommercial and after the "I made a millioin dollars last year working part time from home" advertisement.

all kidding aside, I see no real lender near that quote. A reputable lender or broker would include the APR (cost of the loan included in the rate) and lender or broker license number.
  • February 25 2009
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Profile picture for vjmeht
I see those too.  For awhile the conventionals were declining while the FHAs were stagnant.  Now the FHAs are hitting the 5% or 4.75% area. 

I'm @ 5.5% now.  Still waiting.
  • February 25 2009
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Profile picture for Gambleress
Okay, I keep seeing them advertised lower and did not know whether I should change my mind from a conventional loan.
  • February 25 2009
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Profile picture for CORONA NICK
You get a thumbs up from me Tammy, well said...lol
  • February 25 2009
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Oh, and I forgot, they'll need your first born as well..
  • February 25 2009
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Profile picture for Rob Cochems
4.25% is not available on any program right now without paying significant points.
  • February 25 2009
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If they are advertising 4.25%, you need to look at the super fine, teeny tiny, barely there disclaimer that the rate is available with a 1000 credit score, 10% loan to value and at a cost of $10,000.

I know that seems excessive, but that rate is not available without paying a lot of points to get.
  • February 25 2009
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