Conventional v. State Programs for First Time Home Buyers

August 10th marked a new level of volatility in an already volatile market. Since the middle of July, mortgage rates have been moving lower as the debt ceiling battle in Congress dragged on. That’s not to say that it hadn’t been volatile, but yesterday had a 275 basis point swing during the day. To put it into context, that would be a volatile month and would see rates move anywhere from .50% to .75%. In today’s market, that was just a Tuesday. This volatility will continue and it is going to make a difference in how one should evaluate certain first time home buyer programs.


Mortgage rates are if you are talking normal rates like FHA and conventional or state sponsored programs. That’s because they get their money from different spots. A normal FHA or conventional loan is getting its funding based on what is happening in the market that day. When the market is volatile and changing, so too are mortgage rates for the FHA and conventional products. State programs are different. They tend to sell a bunch of bonds at one time. Then the mortgage rate is set for that state program until they run out of money and have to sell another bunch of bonds. State mortgage program rates vary based on when the state raised the money. FHA and conventional loans vary based on when you lock the mortgage rates. Among other factors, just that difference in when they sold their bonds can explain some differences between Colorado home buyer programs and Minnesota home buyer programs



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