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 30, 2022Once you’ve decided that you’ll be purchasing a home, one of the first questions you need to ask yourself is what kind of mortgage you’ll be using to finance it. When it comes to shopping for a home loan, there are a number of options to consider.
March 3, 2022Savvy homeowners make it a point to monitor interest rates so they can take advantage of a drop. Many choose to refinance their mortgages to capitalize on falling rates and lower their monthly payments and save on interest.
February 24, 2022One of the major hurdles that keeps families from purchasing a home is the need for a down payment. The FHA’s goal is to offer more homebuying opportunities to low- and moderate-income Americans and set more easily achievable down payment requirements for borrowers.
January 31, 2022One of the first steps to take when you decide to buy a home is getting pre-approved for a mortgage. It is important to know what it means to get pre-approved for a home loan, and what the pre-approval letter does and doesn’t do for your home buying chances.
January 10, 2022A home loan is one of the most important investments you can make. Buying a home means owning property, and being a homeowner means there's potential to watch your investment grow in value over time. But first, the lender has to make sure the borrower is a good credit risk.
