Thinking About Refinancing How a Conventional Loan Could Save Your Money

Posted on January 5th, 2011 in Finance by

Thinking About Refinancing? How a Conventional Loan Could Save Your Money.

Homeowners who currently have an FHA

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loan may find that refinancing into a conventional mortgage can reduce their monthly housing expenses. Conventional loans often have lower mortgage rates than comparable FHA loans and lower mortgage insurance costs. So, although FHA loans are a great choice in today’s market, many consumers are finding a savings by refinancing out of an FHA loan into a conventional loan.

Refinancing Your Mortgage Is Easier Than You May Have Thought
However, if you’ve recently purchased a home, or are simply busy with many of the other wonderful things that life has to offer, you may be feeling overwhelmed or wonder if you’re ready to refinance.
Great news! Refinancing is easy! All you need to do is contact a trusted mortgage lender and a Home Loan Expert will walk you through the entire process.

To get you started, here are a couple things to think about when considering this type of refinance:

1) Property Value – Estimate the property value and your equity in the home. With a conventional refinance, if you have less than 20% equity in the property you may have to pay private mortgage insurance. When you’re ready to proceed with a conventional refinance, your mortgage lender will schedule an appraisal of your home.

2) Insurance – When refinancing, mortgage insurance may be required based on your loan to value ratio. However, on conventional loans mortgage insurance can be eliminated after two years, once you’ve reached the required minimum home equity levels. On FHA loans, mortgage insurance must be paid for at least five years, regardless of your loan to value. Additional requirements must be met prior to eliminating mortgage insurance, but this is an important factor to consider that could save you a lot of money!

FHA Refinance with the FHA Streamline

If you’d rather stay with an FHA loan, and potentially take advantage of a refinance without an appraisal, consider an FHA Streamline refinance. Again, your mortgage lender will discuss this with you, but don’t be afraid to ask.

Make Sure it Makes Sense to Refinance

When considering your options, always weigh the cost of the refinance versus the benefit. Your Home Loan Expert can help you calculate how long it will take for the savings of the lower interest rate to make up for the cost of the refinance. Contact us to find out more about how refinancing into a conventional mortgage could help save you money!

Jordan Fylonenko is a writer with Quicken Loans who specializes in articles about FHA Streamline Refinance, Mortgage Refinance, VA Loans and other home-buying related information.

thinking about refinancing? how a conventional loan could save your money. / Author by : HomeLoanGuru