FHA Refinance Versus Conventional Loan Refinance
November 20, 2024
While both provide avenues for refinancing, each loan type may be best for specific needs and financial circumstances. What are the differences between FHA and conventional refinance options?
FHA Refinancing: According to the Consumer Financial Protection Bureau, FHA loans are more accommodating regarding credit history. Although the minimum credit score requirement may vary among lenders, FHA loans may have lower FICO score numbers than certain competing conventional loans.
Conventional Refinancing: Conventional loans typically require credit scores in the mid-600s. Conventional refinancing might offer more for your needs if you possess a strong credit history and a stable financial profile.
Mortgage Insurance
FHA Refinancing: FHA loans typically require mortgage insurance regardless of the down payment amount. This includes an upfront MIP paid at closing and an annual MIP that may be incorporated into your monthly mortgage payment.
Conventional Refinancing: With conventional loans, mortgage insurance is usually required if you made a down payment of less than 20% when purchasing. If you refinance a traditional loan, you may not be required to pay for private mortgage insurance. Be sure to ask your lender about this option.
Appraisal Requirements
FHA Refinancing: FHA loans have specific appraisal requirements prioritizing the property's safety, security, and soundness. The appraiser must be FHA-approved and will conduct a comprehensive inspection to ensure the property meets HUD's minimum property standards.
Conventional Refinancing: While conventional loans also require an appraisal, the requirements are thought to be less demanding than those for FHA loans.
Streamline Refinancing
FHA Streamline Refinance: The FHA offers a streamlined option for existing FHA borrowers. This program often involves less documentation and faster processing times, making it worth considering for those seeking to lower their interest rate or adjust their loan term quickly.
Conventional Refinancing: Although conventional loans do not have a specific "streamline" program, lenders may offer expedited refinancing options for qualified borrowers.
Refinancing is a significant financial decision. Take the time to research your options thoroughly, compare offers, and seek professional advice if needed.
FHA Loan Articles
March 31, 2025Is 2025 the right year for you to consider an FHA streamline refinance? These mortgages are for those who want a lower interest rate, a lower monthly payment, or to move out of an adjustable-rate mortgage and into a fixed-rate loan. We examine some of the critical features of FHA streamline refinances.
March 27, 2025Did you know there are FHA loans that let house hunters buy multi-family properties such as duplexes and triplexes? FHA rules for these transactions is found in HUD 4000.1, including owner-occupancy, require that one unit serve as the borrower’s primary residence. Some house hunters ask why this rule exists. Some believe the rule serves as a lender risk mitigation strategy.
March 25, 2025What does it take to sell a house purchased with an FHA mortgage? Are there special rules, restricrtions, or added considerations? We examine some key questions and their answers to FHA real estate sales issues.
March 24, 2025If you are selling a home, you may need to negotiate with buyers to fund their purchases with an FHA mortgage. What do you, as a seller, need to know about FHA mortgages and how they may differ from conventional loans? We examine some common issues.
March 24, 2025How much do you really know about how FHA home loan interest rates are set and what factors influence them before your lender makes you an offer? We explore some key points about FHA loan rates, FICO scores, and debt ratios.
