FHA rates are not set
by FHA or HUD because they donít actually loan money.
FHA insures loans from lenders that meet FHA standards. Those
standards include the acceptability of the buyer, the
appraisal of the property and the title of the property.
Therefore the FHA Rates that you see as the consumer are set
by the individual lender making the loan.
A FHA mortgage loan has a very low down payment requirement of
around 3.5%. Most borrowers expect to obtain a FHA fixed
mortgage rate loan.
The fact that your loan will be FHA approved and insured may
result in a slight reduction in interest rates or mortgage
insurance cost as compared to a conventional loan.
FHA loans also
have insurance costs to the lender, as do most mortgages with
a down payment of less than 20%. In the case of the FHA,
however, those insurance payments are made to HUD instead of a
private mortgage insurance company. On an FHA loan the
borrower will be charged an insurance premium between 1.5% -
3.0% of the mortgage amount and the yearly payments thereafter
will be between 0% and .55% of the mortgage value.
Rates can and will vary between lenders. FHA rates
change daily and are based on Ginnie Mae bonds sold on Wall
Street. On top of what Wall Street wants then lender has
to make a profit on the loan. Depending on their profit
requirement will determine the FHA Rates that they
offer the public.
basically the difference that you see if FHA Rates among
different lenders. Lender "A" may require a certain
yield that is different than lender "B". The you will
see a different FHA Rates between them.
FHA mortgage rates in your area