The FHA has just announced that it will be lowering the yearly Mortgage Insurance Premium later this month. Currently the Yearly Premium is 1.35%, but the new Premium will be 1/2 of a percent (0.5%) lower at 0.85%. In the wake of the 2008 “Financial / Housing Meltdown” in the U.S., the Federal Housing Administration (FHA) played an important role for Homeowners. FHA Insured Financing allowed Borrowers to buy a Home with Down Payments as low as 3.5% and in addition was more forgiving regarding Credit Scores and other qualifying criteria. Because the FHA was Insuring the Loan, it was also the case that the Interest Rates available for FHA Loans were lower than what was available through Conventional Financing. In exchange for all of these benefits, the Borrower paid “Mortgage Insurance” in the form of both an “upfront” and ongoing “yearly” Premium.
One of the most common questions I’m asked is: “Am I going to have to pay a higher Interest Rate because it’s a Mobile Home?”. The short answer is…not really. New Horizon Mortgage Concepts has aligned itself with Lenders that aren’t afraid of Manufactured Homes…and that gets reflected in the Interest Rates. In general, much of what Banks do is based upon perceived risk. If a Lender feels that a certain type of Borrower, or Housing Type, is “riskier”…they’ll do a variety of things to “offset” that risk. Raising the Interest Rate is one the “tools” utilized to compensate for (perceived) risk. However, not all Lenders “perceive” Manufactured Homes as being a higher risk…and so the Interest Rates they offer are competitive with the Rates offered on other types of Properties. Keep in mind that Interest Rates are also determined by Credit Scores, the type of Loan Program (for example Government vs. Conventional), and even what State a Property is located in. In many instances, we’ll have “well qualified” Borrowers paying a lower Interest Rate on a Manufactured Home than a lessor a qualified Borrower might pay on a “stick built” home. So, there’s more to Interest Rates than meets the eye…and our Clients are frequently surprised and ultimately pleased with the Interest Rate we secure for them on their Manufactured / Mobile Home Loans.
Based on the most recent meeting of the FED, and per comments by Janet Yellen, although the Government is going to be cutting back on their buying of Bonds (i.e. Economic Stimulus), Long Term Interest Rates are expected to remain low into 2015.