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
April 11, 2021With the trend of falling interest rates since 2019, the number of mortgage refinances around the country has spiked and continues to rise. Borrowers with FHA loans can also capitalize on the low rates, but it may be possible to simplify the process with the FHA Streamline Refinance.
April 3, 2021Borrowers can choose to refinance for several reasons, but it comes down to prioritizing different benefits. One homeowner may want the lowest possible monthly payment, while another might want the shortest possible term for their loan.
March 29, 2021The FHA helps first-time and low-income homebuyers by having lower down payment requirements for its borrowers. Despite this lower credit eligibility criteria set by FHA, it is important to remember that FHA-approved lenders can set their own requirements
March 24, 2021One of the major arguments people have for renting instead of buying is the large upfront cost of a down payment. Depending on the type of loan program you apply and are approved for, this could mean anything between 3.5% and 20% percent of your purchase price.
March 21, 2021The two basic types of home loans are fixed rate and adjustable-rate mortgages. The mortgage market offers many other options to homebuyers, but these two are the most common, and the first pair from which to pick.
