According to the Mortgage Banker’s Association in Washington, DC, the applications for “Government” backed loans is MUCH higher than for any other segmant in the market. Traditionally, if you were interested in purchasing a $300,000 house – you would consider a Conventional Mortgage Loan. We would often do those loans as 80-15-5 with the borrower putting 5% of thier downpayment into the transaction, and then get two other loans (80% and 15% of the amount needed). Conventional Mortgage Loans made through the Banks have long DOMINATED the total applications for mortgages in the Country.
That’s why a shift to FHA / VA / USDA mortgages as is BIG NEWS!
“The MBA’s Weekly Mortgage Applications Survey found that the Federal Housing Administration (FHA) and the Veteran Administration (VA) backed 35.9% of all mortgage applications in the month of June, spiking from 25.7% from a month earlier and 27% from June 2008.”
“A primary reason government-insured loans have retained a high share of the purchase market is that these loans typically require lower down payments than conventional loans,” said Orawin Velz, MBA’s associate vice president of economic forecasting, in a corporate statement Thursday.
What does this mean for you, and getting the best mortgage interest rate?
Mortgages can be looked at as a commodity – the more people willing to purchase a government backed mortgage, the better the price will be. In the past, FHA/VA and USDA mortgages priced 1/2% in interest higher than a Conventional mortgage loan… meaning, if the best Conventional mortgage interest rate was 5% – the best FHA/VA/USDA price (or mortgage interest rate) you could expect would be 5.5%.
We are seeing that margin get smaller – meaning if you have 3.5% to put into a transaction, so that you can get an FHA mortgage, you will probably get a rate of 5.375% or maybe even 5.25% if everything is “lining” up correctly! Yippee!
For more information on Risk Based Pricing, please click here.
For information on how to get the lowest mortgage interest rates in Cary, NC, and what questions to ask, please click here.
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