Most people have several misconceptions when it comes to the FHA loan program. The popular mistake that most borrowers make is that they believe that the FHA is the regulatory body that predetermines the borrowing interest rates for FHA home loans.
This common perception is not entirely untrue as the FHA does regulate the loans to a certain extent. These things include determining minimum credit score requirements, minimum down payments and allowable closing costs.
Although the FHA regulates certain noted above, it is not in charge of setting interest rates. All adjustable rate mortgages that are insured by the FHA for instance have their own limits on how often and when their interest rates can be adjusted. The FHA lays down caps on how many percentage points can be changed for the borrower during the lifetime of a loan that has a variable interest rate. However, the Department of Housing and Urban Development does not inform the lender about the rate of interest levied on the loan. Instead, the interest rates are negotiated between the lender and the borrower as part of the borrowing process.
According to the official website of the FHA, they clearly mention that the FHA is no way responsible for regulating or determining the discount points, interest rates or the closing costs that are charged by the lender. It is up to the borrower and the lender to negotiate the interest rate, fees and points of the loan.
The fact that the borrower and lender negotiate the loan rates as part of the FHA loan process is the reason why the FHA loan counselors ask borrowers to carefully consider their lenders before borrowing, evaluate terms and conditions and compare the rates offered with the prevailing rates in the market. As a borrower, if you do not take time to evaluate lenders based on the rates and terms offered, you would not be able to obtain the best deal irrespective of whether the loan in consideration is a traditional mortgage or an FHA loan.
The advantage of the FHA loan in Florida is that the loan has certain features and conditions that are favorable in terms of the money saved by borrower, as compared to a traditional mortgage loan. According to the regulations, FHA costs cannot levy excess costs or inflate the fees and should always be reasonable to serve the borrower’s needs so that he can purchase a home of his choice. This is especially good for first time home buyers in Florida.
Questions? Please let us know how we can help by submitting the quick information request form on the right side of your screen>> fha interest rates at www.fhamortgagesource.com
Please also be sure to click www.UsdaMortgageSource.com to learn more about the 100% USDA Government backed mortgage here in Florida. The USDA loan requires no money down for qualified locations in Florida.
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