Why FHA Borrowers Are Getting Overcharged

Transcript

“If you’re getting an FHA loan, there’s an important piece that you need to know regarding your financing. One is there’s a different pricing model used by most lenders for fha. What that means is they move their margins on this so they make more money typically in an FHA loan than they do a regular conventional loan.

There should be a large gap in the pricing between a conventional loan and an FHA loan. FHA loan should be much lower cuz there’s insurance placed on that loan that you pay for in your upfront mortgage insurance premium and your monthly mortgage insurance because that insurance is placed on your loan and ensures the lender a lower interest rate with insurance.

Is worth the same in the secondary market, is the higher interest rate without insurance. So what does that translate to you? How much today? I ran a six 80 FCO score, 500,000 loan, 20% down FHA was 1.25% lower in interest rate. So if you call me, you’re gonna get a 1.25% lower interest rate than a conventional loan for the same exact scenario.

Most lenders, you’ll see them move that up. What does that do? It doubles, triples, sometimes quadruples the profit to the lender and you pay a higher rate. That rate over 30 years can translate into, in that scenario, you’re looking at over $160,000 more in interest. You’re paying over the life of the loan.

So those are real numbers. Those are numbers you need to think about. And also you need to think about the fairness. You know, people talk about fairness in this world, but when lending, you can actually nail that down cuz you can say if you’re making the same, it’s. If you’re not, it’s not fair. And if you’re making the same, the FHA rate, just like in the va, my other videos should be lower.

This is really important for you as a consumer, and if you want more information, look at my other videos and you can call me directly at Texas Home Loans.”