Comparing FHA Bank Loan Rates

Do your homework to get the best loan interest rate.

The Federal Housing Administration (FHA) insures mortgages originated through approved lending institutions and banks. FHA does not lend directly to borrowers, and it does not set the interest rates for loans it insures. To compare interest rates on FHA programs, you must shop around.

Considerations

Interest rates on FHA programs vary by lender. Also, economic activities such as bond prices and job reports affect mortgage interest rates and can change the rates quickly and significantly, according to The Truth About Mortgage.

Expert Insight

To get the most competitive FHA loan rate, allow two or three banks to compete for your business. Obtain bank rate quotes online or from a bank referred by a real estate agent. The Interest website advises you to get a quote from your credit union, which is smaller than a commercial bank.

Warning

The rate on your FHA loan is subject to change until the bank secures or "locks" it in. The bank you decided to use may no longer have the best rate 30 to 45 days into the transaction if the rate was not locked in, warns Interest. If you are offered a higher rate before the close of escrow, you can shop it again with another lender, but that pushes back your closing date.

References

• The Truth About Mortgage: How Are Mortgage Rates Determined?
• Interest.com: How to Land the Best Loan