FHA 203k Interest Rates- Are they higher?
I get questions all the time about the interest rates on FHA 203k rehab mortgages- everyone wants to know what the rates are- this isn’t a simple answer. FHA 203k loans are more expensive– both in regards to interest rates and loan fees. Why you ask? Simple- these loans are complicated, have a longer process and pose higher risk. We will not even lock the interest rates on one of these loans until we are cleared to close by underwriting. There are too many moving parts and they must all be working together.
When a customer emails me about getting pre-approved for a FHA 203k rehab loan I always make sure we go through a thorough 15-30 minute conversation regarding the process, costs and correct expectations for everyone regarding this loan. I will do another post just about setting expectations– enormously important point for anyone looking to do any type of loan.
FHA 203k loans typically have interest rates that are anywhere from 1/4% to 3/4% higher then your typical FHA loan. It depends on what lender you go through. I do strongly urge you to make sure your lender has experience doing FHA 203k loans. Regardless of the rate- experience is more valuable then whether you pay 5% or 5.25%. Trust me- from my experience I get 5-10 calls a month from customers who talked to a broker or even worse one of the big banks that does these types of loans and they were fed incorrect information. This misinformation can cost you time and money. There is nothing worse then learning the loan product with your loan officer or banker. Doing your due diligence as a customer is half the battle.
Not to do a shameless plug (but I will :)) but I am licensed in over 15 states so if you are looking in one of these states I will be happy to help you. If you are in another state that I am not licensed in don’t worry I have contacts all over the country and will make sure you get the proper experienced FHA 203k expert. Just feel free to reach out to me.
Jeff Onofrio–Licensed Mortgage Originator — NMLS #38670 — Office 856-505-6717 — Mobile — 609-217-9409