What is a Conventional Refinance?
Whether you are looking to reduce your monthly payment or get a lower rate, a conventional refinance loan might be just what you want. This loan, which is for non-government backed loans, offers competitive interest rates to well-qualified buyers with solid equity in their home.
Homeowners with enough equity in their homes (at least 20 percent) who currently have FHA loans, often find that a conventional refinance loan reduces their monthly payments by eliminating monthly mortgage insurance. Imagine, keeping the same or close to the same rate, but paying less per month.
Conventional loans are all the loans that are not made or backed by the federal government. There are several types of these loans including fixed, adjustable rate mortgages (ARMs) and interest only. Both ARMs and interest only loans are all subject to additional underwriting guidelines. “Conforming loans” are eligible for purchase by Fannie Mae and Freddie Mac and often require full documentation and private mortgage insurance if you have less than 20% of equity in your home.
What are the benefits?
One of the biggest benefits is having a reasonable monthly payment without having to pay mortgage insurance. This puts money back in your pocket to spend the way you want.
Another benefit of a conventional refinance is you have access to competitive rates with flexible terms. Moreover, a conventional refinance may be a better choice even if you are required to pay private mortgage insurance because the private mortgage insurance will terminate after the 20% equity is obtained.*
How do I qualify?
If you have good credit and a solid financial profile, a conventional refinance loan is ideal for you. Qualifying factors may include:If you have good credit and a solid financial profile, a conventional refinance loan is ideal for you. Qualifying factors may include:
- Above average credit score
- At least 20 percent equity in your home
- Less than 20% equity will require private mortgage insurance
- A low debt-to-income ratio
- How do I apply for a conventional refi loan?
To learn if you qualify, speak to a dedicated Lakeview mortgage professional today by calling 1.855.294.8564. *Certain restrictions apply