Words of Wisdom from one of my favorite lenders....(this was e-mailed to me on the 10th, date of posting is the 11th, so keep this in mind when reading references to 'yesterday' or 'today')

"In the spirit of keeping you educated...

I have been asked 4 times this week about Interest rates for FHA loans compared to Conventional loans & why Mark Baker charges an Origination Fee on FHA loans. With 4 people asking, that would mean that many of you are wondering the same thing. Without boring you, here is a brief explanation & some GFE examples, if you care to know.

On most government loans (FHA or VA) the Seller is paying 3 points towards the Buyer's closing costs. If you don't use the money, the Buyer leaves it for the Seller. Hence, most GFE's we push out for FHA loans are priced with an Origination point so we use the money(yes it is really that simple). If you don't want to check out the GFE's attached, let me break it down for you. On FHA financing from yesterday morning's rate sheet, the rates were:

0 points = 6.00%
1 point = 5.875%
2 points = 5.375%

We have seen days where 1 point will get you up to .5 lower on the rate just like the difference above between 1 point & 2 points. We have also seen where 0 points = 6.25% & 1 point = 5.875% in the last couple of weeks.

On Conventional loans yesterday morning (with 10% down), the rates were:

0 points = 6.125%
1 point = 5.875%
2 points = 5.625%

Keep in mind that yesterday we also had a rate change & Conventional loan rates dropped .125% (6.00%, 5.75%, & 5.5% for the same loans as above) while FHA rates did not change.

The bottom line is, mortgage rates for FHA vs. Conventional are totally different. Interest rates change every day & sometimes multiple times in a day. Buyers that shop for the best rate are easily bamboozled by a Loan Originator thatquotes the lowest rate to lure the Buyer & lock them in. That is not what they get when they show up at closing if their LO does not work for them. There are many examples where the lowest rate at rate quote turns out to be the highest rate at closingif the LO does not keep an eye on the market (happened last week with one Buyer that I know of). The Buyer that shops around for the cheapest deal rarely gets what they bargained for at the end of the day. (You know me & I love that!)

Hope this clears things up if you were wondering.'

Interested in buying in Las Vegas either e-mail me or give me a call using my contact info at the right. Give Mark Baker a call for all your lending needs.

www.MaryWarren.com or www.MaryW.com