Ohio FHA Interest Rates

The news has been reporting record low mortgage rates for the past couple of weeks. I’m sure you’ve seen the reports, right? The question remains, how does that affect you?

If you are in the market for an FHA mortgage, whether it is an FHA Streamline Refinance, a normal FHA refinance or an FHA Purchase a few factors will come into play when determining the interest rate you receive.

A few of the factors that lenders take into consideration are:

• Credit Score – lenders will look at your middle credit score
• Debt Ratios – monthly debt compared to your gross monthly income. The absolute max for an FHA loan is 56.99%, however some lenders have lower caps.
• Loan Amount – some lenders impose adjustments (negative and positive) based on your loan amount

So let’s take a look at a couple of examples based on Ohio Mortgage rates as of June 1, 2012.

Ohio FHA Refinance

Mary in Cincinnati, OH are looking to refinance their primary residence into a new FHA mortgage. Their details are:

Middle Credit Score: 741
Amount Owed: $150,000
Property Value: $175,000
Location: Cincinnati, OH

Based on the above information Mary may opt to refinance at:

FHA 30 Year Fixed
Interest Rate: 3.5%
Estimated Principal & Interest & Mortgage Insurance payment: $835.35
Estimated Closing Costs: $950 + appraisal
Estimated APR: 4.10%

Now what if Mary had a 665 middle credit score?

FHA 30 Year Fixed
Interest Rate: 3.5%
Estimated Principal & Interest & Mortgage Insurance payment: $835.35
Estimated Closing Costs: $2300 + appraisal
Estimated APR: 4.178%

Notice the $1350 increase in the closing costs? That is the result of the credit score difference of 76 points. Mary would have other options to keep her closing costs lower, but they would involve a higher interest rate.

Homeowners that currently have an FHA mortgage that was endorsed by HUD before May 31, 2009 (translates to a closing no later than May 10, 2009) should begin thinking about taking advantage of the FHA Streamline Refinance changes that go into effect in less than 2 weeks.  The examples above do not take into account the lower FHA mortgage insurance requirements for Streamline Refinances starting June 11, 2012.

Homeowners need to keep this in mind when checking interest rates online or reading about them in the newspaper. Generally the mortgage interest rates that are reported are based on certain criteria (750 credit score, $200,000 loan amount, etc, etc.) and may not fit their situation.

Every individuals situation is unique, and that is where a good Loan Officer can be worth their weight in gold. They can help you understand all of your options.

You can contact me directly or request a rate quote if you would like to review your options.