With the housing recovery slowly taking shape, a greater number of risky borrowers are closing their loans, which could lead to an imminent rise in defaults and halt America’s progress in the right direction. Having an ever-expanding void with nothing to back it up is surely going to come back and bite us. Take expert predictions with a grain of salt but keep yourself informed.
The source of this occurs with first-timers going with FHA-backed loans that are known for their more lenient qualification conditions and very low money down – usually 3 percent to 5 percent – provided by lenders which aren’t official banks. The phenomenon stems from these non-bank lenders having more permissive eligibility requirements than those of actual banks. Even considering non-official lenders often having slightly higher rates than official banks, first-time homeowners are nevertheless attracted to low down payments of their FHA-backed loans.
The rates are currently hovering around 4.15 percent – a 7 basis-point increase from last week. Quicken Loans, a non-official lender, has its rates for 30-year fixed mortgages at 4.25 percent. But due to its more lenient credit requirements, more and more homeowners would rather close with them than official banks.
The go-to loan for an increasing number of prospects is the FHA-backed mortgage. This is based on an increase in demand reaching 22% of all mortgage applications in 2016, up from 17.8% in 2014. That is still lower than the 2010 numbers (34.5 percent) when things were far worse. More backstory on this recent rise in FHA loan applications can be found here.
The Quicken Loans’ three main FHA loan requirements for prospects are:
- Credit scores need to be 580 or up.
- Down payments can be as low as 3.5 percent.
- A low mortgage insurance premium.
Interested buyers can learn more from this article concerning FHA loans.
Other mortgage options with Quicken Loans include 10-year adjustable rate mortgages (ARMs), 5-year ARMs, 15-year fixed mortgages, and VA loans. Their rates as of now are shown below for anyone who’s interested.
- 10-Year ARM: 3.75%
- 5-Year ARM: 3.375%
- 30-Year Fixed: 4.25%
- 15-Year Fixed: 3.99%
- VA 5/1 ARM (1/1/5): 3.375%
With the Fed’s next meeting taking place tomorrow, things will get clearer with respect to the coming month’s rates. If rates are to be raised as was anticipated by 80% of all experts and the Fed’s last minute report, then FHA loans are most likely going to follow suit with low-income families trying to compensate.
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Source by Ali Shokri
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