FHA Home Loans Refinancing

Current FHA Rates Fall to the Lowest Level of the Year


As the housing sector and American economy continue to struggle, FHA mortgage rates have declined to the lowest point of the year. As usual, bad news in the economy has help create good news with the current FHA rates dropping. This should help loan companies that provide government financing like FHA mortgage programs that slowed down drastically after HUD raised FHA insurance premiums last month for the 2nd time in the last 6 months. The noteworthy drop in FHA interest rates could help off-set the insurance rate hikes.

The US Government has the Ability to Stem the Foreclosure Crisis with Aggressive FHA Home Loans

Even with inflation concerns coming into focus, the Federal Reserve has kept the key interest rates at nearly zero percent. Fed Chief Bernanke has kept his promise of doing everything he can to help the housing industry rebound because Americans have access to the longest streak of affordable home financing that we have seen in a century. Still with home values falling for 37 consecutive months you have to wonder what it will take to get the housing sector back on track.  Former Ditech mortgage executive, Jeff Morris said, “Lenders could drop rates to 2% and home values would still be hindered because it’s the tight mortgage guidelines and unreasonable requirements for lending that are preventing millions of Americans from refinancing mortgages and preventing millions of consumers to become first time home buyers.”  Morris continued, “The FHA mortgage rate is amazingly low and affordable but it is not accessible for a high percentage of Americans who simply don’t qualify with today’s tighter conventional and FHA guidelines.”

Get Approved for the Lowest FHA Rates in 2011

Many loan professionals believe the 2011 FHA requirements have gone too far too quickly.  Too many homeowners have been hung out to dry with adjustable rate mortgages that they cannot afford but refinancing with FHA or a traditional lender simply is not an option because they do not meet loan eligibility.  Homeowners should have been given a grace period to refinance before banks and lenders tightened refinance and purchase money guidelines.  The pool of qualified borrowers for mortgage refinance and home purchase loans has shrunk to the lowest level in decades.  Food and energy costs have skyrocketed yet most Americans are making less. With a 9% unemployment rate, we anticipate FHA rates will remain loww for the rest of 2011 and into 2012.

5 Recommended Changes that FHA Should Incorporate to Help the Housing Sector Rebound

  1. Eliminate the FHA Minimum Credit Scores for Home Loans – One of the keys to FHA’s success has been their flexible criteria with credit. Qualified borrowers have been benefiting from bad credit refinancing with FHA for decades and the default rate has always been minimal because FHA underwriting has been good at approving loans that make sense.
  2. Revert back to 2009 Rate for FHA Premiums – This will lower the housing expenses by hundreds of dollars a month for many homeowners in the high cost regions like California, Colorado, Connecticut, Florida, Washington DC, Virginia, New Jersey and New York.
  3. Allow Mortgage Refinancing to 125% for rate and term transactions for homeowners that have not been late on the mortgage in the last 24 months and who have had their home loan prior to 2008.
  4. Enable homeowners to consolidate 1st and 2nd mortgages together up to 100%.  Many homeowners have credit lines and 2nd mortgages with high interest rates and they do not have enough equity to refinance.
  5. Keep the FHA loan limits at current levels. This will help homeowners leverage the low fixed 30-year mortgage rates and provide peace of mind and protection against inflation and rising interest rates.

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