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
June 8, 2021While an FHA home loan is a good option for first-time homebuyers who don’t have enough money saved for a large down payment, it’s important to understand the ins and outs of the FHA guidelines, and what it takes to get approved as a borrower.
May 24, 2021With historically low interest rates, the mortgage industry has seen a sharp uptick in refinances. Taking advantage of the current market might be in your best interest and could lower your monthly payment significantly. Don’t forget that refinancing a mortgage comes with closing costs.
May 8, 2021With a new waiver in place, Dreamers have access to affordable FHA home loans designed for first-time homebuyers. There is no discrepancy in the FHA’s eligibility requirements when it comes to DACA status holders applying for an FHA-backed mortgage. They must meet all the same criteria.
April 30, 2021Buying a house is overwhelming to begin with. Make it a seller’s market, and buyers become even more nervous. Supply of real estate has been low for most of 2021, in part because of the Coronavirus pandemic and the historically low interest rates since 2019.
April 23, 2021No matter what kind of market you’re in, it is always best to get pre-approved before going to shop for houses. The last thing you want is to go look at homes, find the one you love, then have to wait on an approval and lose the dream home to another buyer.
