How To Prepare For An FHA Loan With The Best Mortgage Rates
- FHA loans are one of the most home loan programs in the United States
- Over 35% of all mortgage borrowers use FHA loans for home purchases and refinances
- Lenders are more than eager to extend credit on FHA loans to qualified borrowers at low mortgage rates due to the government guarantee
- Mortgage rates on FHA loans are lower than conventional mortgage rates
- This is due to the government guarantee
- However, mortgage rates on FHA loans are dependent on credit scores as well as other factors
- Credit scores have the biggest impact on FHA mortgage rates
- There are ways of boosting credit scores quickly
- Experienced loan officers can guide borrowers on ways of increasing their credit scores quickly
- We will cover on how to increase credit scores in this article
In this article, we will discuss and cover How To Prepare For An FHA Loan With The Best Mortgage Rates.
How To Prepare For An FHA Loan With The Best Mortgage Rates: Loan Level Pricing Adjustments
The higher the risk a lender takes with a borrower, the higher the mortgage rates they charge.
- Higher risks mean higher rewards
- There are various loan level pricing level adjustments lenders charge for layered risks
- However, credit scores are the biggest factor when it comes to mortgage rates
- The higher the credit scores, the lower the mortgage rates
Borrowers who are focused on getting the best mortgage rates should try to boost their credit scores prior to applying for a mortgage.
FHA Versus Conventional Mortgage Rates
One of the most frequently asked questions we get daily at GCA Mortgage Group is does prior bad credit have an impact on mortgage rates?
- The answer is NO
- A prior bankruptcy, foreclosure, deed in lieu of foreclosure, short sale have no impact on mortgage rates
- Late payments have no bearing on mortgage rates
- Outstanding collections and charged-off accounts have no impact on determining mortgage rates
- However, there are loan level pricing adjustments or pricing hits that lenders will charge when determining mortgage rates
We will discuss the topic of how lenders determine mortgage rates on FHA loans.
How Do Lenders Determine Mortgage Rates On FHA Loans
How To Prepare For An FHA Loan for borrowers should start months before applying for the loan.
- The best way on How To Prepare For An FHA Loan with the best rates is to boost your credit scores
- There are quick fixes in maximizing your credit scores
- There are a few factors on how lenders price out mortgage rates
- However, the number one impact on mortgage rates is credit scores
- The higher the borrower’s credit scores, the lower the mortgage rates
- Any layered risks the lender takes on, there is a pricing adjustment on that hit
Not all lenders have the same pricing hits on layered risks. One lender may have pricing hit on high debt to income ratios and a different lender may not.
How To Prepare For An FHA Loan And Minimizing Loan Level Pricing Adjustments
The following factors play a role in how lenders determine mortgage rates on FHA loans: