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FHA loans are one of the best options for young, first-time home buyers who have not had as much time to save for a large down payment or establish a high credit score.

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Mortgage Rate Predictions for 2024


Mortgage Rate Predictions for 2024
In the last days of November 2023, mortgage loan rates flirted with the 8% range but have since backed away, showing small but continued improvement. What does this mean for house hunters considering their options to become homeowners soon?

The short-term gains benefit anyone considered ready to apply, but those who need more time should not interpret such trends as long-term patterns until there’s enough of a history of consistently lower rates.

FHA Home Loan Mortgage Rate Improvement

In the short term, rates can move sharply higher or lower, but over the long term, such moves won’t mean anything until they consistently perform at those levels. A good example of that? In October 2023, mortgage rates were reported by Bankrate as hitting 8%.

But that didn’t persist, and it was a short term increase. Over time, numbers fell back down into the 7% range. The fact that the rates hit 8% briefly wasn’t necessarily an indicator that rates would soon rise and stay in that range.

You may find rates changing by a few increments daily, but that doesn’t mean much until shored up by larger patterns.

Mortgage Rate Protection

Some read the above and wonder how to protect themselves against rate changes.

When you find a house you are serious about making an offer on, that’s the time to talk to your participating FHA lender about locking the home loan interest rate you are offered to protect it from any changes on the way to closing day.

This is called a mortgage rate lock commitment, and you negotiate with the lender to get an interest rate offer locked in until closing day or the agreement's expiration date.

Your lender may charge a fee for this rate lock, and the rate is locked for a specific amount of time you and the lender agree to. The lock is not indefinite, and if your lock expires before closing day you may need to renegotiate the lock.

What to Remember

Talk to your participating lender about this option early in the loan research and planning process, but don’t expect the lender to offer you an indefinite lock.

Your agreement with the lender has a specific place and time in the process, and you won’t have access to it until the time is right.

Interest rate lock agreements are a standard part of doing business with an FHA loan or any other type of mortgage. No two lenders may have identical policies, so it’s smart to ask about the lender’s rate lock guidelines when comparing financial institutions to consider for your FHA mortgage.

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