FHA loans closed at the highest clip in the past 18 months.
Over 70 percent of FHA loans closed in the month of May, a jump from about 67 percent in the month of April.
FHA loans are known as being one the easiest programs to qualify for. Applicants only need a credit score of 580, and downpayments can be as low as 3.5%.
Also, FHA loans have some of the lowest mortgage rates available. Rates on FHA loans are consistently lower than similar conventional loans. This makes FHA one of the best loan programs available.
Now, FHA loans are also the most likely of any major loan to get approved.
Home buyers should take advantage of the low required credit score, low downpayment and low rates associated with FHA loans.
It’s Becoming Easier To Get FHA Approved
The percentage of FHA loans that closed were reported by mortgage software company Ellie Mae. Each month, they release a report of all loans that went through their software and compile an Origination Report.
The Ellie Mae Origination Report shows the percentage of loans that closed in a 90 day period. The higher the percentage, the more likely loans were to close in a normal amount of time. According to Ellie Mae, 71.2% of FHA loans closed in a 90 day period.
Purchase loans closed at a particularly high pace. Ellie Mae reported that 74.6 percent of purchase loans closed, up four percent from April. In May of 2015, only 63.1% of FHA purchase loans closed.
The Federal Housing Association (FHA) has recently been loosening their requirements for loans. This has made it easier for lenders to close FHA loans for borrowers, and it has made it easier for borrowers to get mortgages.
This has greatly affected FHA purchase loans which were four percent more likely to close than they were in the month of April.
FHA Refinances Close At High Clip
Refinances backed by the FHA have been closing at a much higher pace than they were over the past year.
In May, 69.2% of FHA refinances closed. This is a huge increase from April when only 57.3% of refinances closed.
In May of 2015, FHA refinances were more likely not to close with only 48.9% of applications closing.
Refinancing has been a popular option of the past few months. Mortgage rates have been dropping to record-low levels, and they are not showing signs of rising any time soon. Low rates not only makes home buying more affordable, but they make existing mortgages less expensive.
Overall, refinances were more likely to close in May than they have been in the past 18 months.
Ellie Mae reported that 67.2% of all refinance applications closed in May, up from 64.6% in April. This number represents all refinance applications including FHA, conventional and VA loans.
Low mortgage rates have been fueling refinances for the past few months, and refinances has steadily been getting more likely to close. There is a chance that refinances will close at an even higher clip in the month of June.
This month has already seen record low mortgage rates. According to Freddie Mac, mortgage rates are down to an average of 3.54% for a 30-year fixed rate mortgage. This is their lowest level in 37 months.
However, refinancers might opt to get a 15-year fixed rate mortgage which offers even lower rates.
Either way, those looking to refinance could find some big savings.
Current Rates Fuel Mortgages
Not only are mortgages closing at an incredibly high percentage, but they also have the lowest rates in the past 3 years. Low mortgage rates makes home buying more easily affordable, and more home buyers are being approved than before.
Summer is typically the busiest season for home buying. Those looking to purchase a new house might want to lock in at current rates while most mortgage applications are still getting approved.