Rates haven't budged much lately. So borrowers are getting creative about cutting costs anywhere they can.
That's pushing both FHA loan applications and refinances higher.
Refinance activity jumped 81% compared to last year, driven partly by FHA refinances climbing 12% in a single week.
Why the FHA surge? The rate advantage.
FHA loans typically run about 0.125% to 0.25% below conventional mortgages.
That might not sound like much, but on a $300,000 loan, that quarter-point saves you roughly $49 monthly.
Over 30 years? Nearly $18,000.
The trade-off is mortgage insurance. FHA loans require 1.75% upfront plus 0.55% annually, and for most borrowers, that insurance never goes away unless you refinance into something else.
Still, when rates are stuck in the 6% range and nobody expects them dropping to pandemic lows anytime soon, borrowers are doing the math.
A slightly lower rate plus manageable insurance beats sitting on a 7% mortgage from last year.
The bigger picture: mortgage activity is picking up because people are working with what's available rather than waiting for rates to fall. Sometimes the move isn't dramatic.
It's just cheaper than doing nothing.
