The Federal Housing Administration [FHA] does not set interest rates. Lenders who do FHA loans set them. Just like with any other loan, there are questions you want to ask so that you get comparable answers if you are shopping. The most important thing to keep in mind is that rate is not the be all end all. Several other important factors need to be considered.
The first common theme you want to establish once you have located a lender or several who do FHA loans is this: If I locked a rate today for 45 days and did not want to pay any points or origination fees, what rate would I receive? Some lenders may quote 15 day rates which will be lower than 45 day rates. It is unrealistic to close a loan in 15 days if it is a purchase loan. Even the field. And make all your calls on the same day.
The second and even more important common theme has to do with
closing costs/pre-paid expenses. A lower rate with higher fees may not be a better deal for you. And you want to get a Good Faith Estimate of Settlement Costs in writing to see what comparisons can be made.
The third and most important thing to do is to select a loan officer who will not just give you answers you want to hear, but will give you honest and good advice. If you have a trustworthy loan officer, then the first two items should fall into place. You can ask friends who have bought homes what they thought about their loan officer and if they have good things to say, there is a very good chance that that loan officer can find you an FHA loan. Knowledge of the ever changing underwriting standards is very important. You do not need to be left at the five yard line because the loan officer was not honest, knowledgeable, or both.
Answer Submitted on Fri, Nov 21 2008
Rate this Answer: