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There are different mortgage programs available which differ from each other somewhat. But part of these differences may be the mortgage rates that come with them. In this article, we’ll go into more detail about hoe mortgage interest rates compared between FHA loans and conventional loans.
Home buyers and mortgage shoppers in Washington are sometimes surprised to learn that jumbo loans often have lower mortgage rates than their smaller “conforming” counterparts. Likewise, some find it surprising that FHA and conventional loans can have similar interest rates (with all other things being equal).
These are just a few of the things we can learn by looking at industry-wide rate surveys, like those conducted by Freddie Mac and the Mortgage Bankers Association (MBA). It also underscores the importance of getting an actual rate quote from a lender, instead of making assumptions.
By analyzing these surveys, borrowers can learn some things about mortgage rate trends, and about how different loan products might affect the rate. Here are two interesting highlights from a recent survey:
A “conforming” loan is one that conforms to the standards (including size) used by Fannie Mae and Freddie Mac. A jumbo loan, on the other hand, is one that exceeds the size limits for the county where the home is being purchased.
Borrowers sometimes assume that a jumbo loan would have a higher interest rate than conforming, since there’s a larger amount being borrowed. But that’s not always the case. Sometimes mortgage rates for conforming loans can be higher than rates associated with jumbo loans. And that’s the case right now.
In their latest survey, MBA officials found that the average interest rate for 30-year fixed mortgages with conforming balances was 5.37% (with some points paid at closing). The average rate assigned to jumbo loans during the same period was 4.89%.
Granted, rates can vary from one borrower to the next for a number of reasons. Credit scores, discount points, down payments and other factors can influence the rate you receive on a home loan.
Home buyers also wonder about the differences between FHA and conventional loans, as far as interest rates go. Which type of mortgage offers lower rates, on average? The answer is that the averages for these two products are usually pretty similar, with all other things being equal.
As mentioned earlier, there are several factors that can affect the rate you receive on a home loan.
Learn more about these influencing factors that determine your mortgage interest rate.
Will you need mortgage financing to buy a home in Washington State? We can help. Sammamish Mortgage has been serving buyers across the Pacific Northwest since 1992. We offer a wide variety of mortgage programs and products for homebuyers in Washington, Idaho, Colorado, and Oregon, including our Diamond Homebuyer Program, Cash Buyer Program, and Bridge Loans. Please contact us today with any financing-related questions you have.
Whether you’re buying a home or ready to refinance, our professionals can help.
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No Obligation and transparency 24/7. Instantly compare live rates and costs from our network of lenders across the country. Real-time accurate rates and closing costs for a variety of loan programs custom to your specific situation.