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
September 17, 2022The FHA sets these limits annually according to the location and type of home, and it represents the maximum loan amount the agency will insure. Approved FHA-lenders can set their own requirements in addition to the FHA’s criteria for borrowers, such as higher credit scores.
August 23, 2022Credit scores tend to be a source of anxiety for many Americans, because they realize the weight they hold when it comes to getting a loan for nearly anything. Taking the mystery out of this 3-digit number goes a long way to helping people understand and increasing their score.
June 16, 2022It’s a great option to consider if you want to build your dream home on your own land instead of buying someone else’s already-lived-in house. FHA One-Time Close mortgages are also referred to as single-close construction loans--you’ll see these terms used interchangeably.
May 7, 2022The appraisal process is a very important part of buying a home. When you are budgeting and planning for your loan, you may want to set aside some extra funds in case there are corrections required as the result of an appraisal.
April 12, 2022There is a major question some new borrowers have about home loans in general, that also applies to construction loans in particular. If you want to apply for an FHA One-Time Close construction loan, there are certain rules about loan funding that you should know about.
