Refinance Programs. Both FHA and Conventional home loans allow you to refinance your mortgage to get a lower mortgage payment and better interest rate. FHA Refinance. If you have an FHA loan you may qualify for an FHA streamline refinance. A streamline refinance works the same as traditional refinancing but requires less paperwork.
The main difference between FHA and conventional loans is the government insurance backing. federal housing administration (FHA) home loans are insured by the government, while conventional mortgages are not. Additionally, borrowers tend to have an easier time qualifying for FHA-insured mortgage loans, compared to conventional.
FHA vs. Conventional Loans: The Loan-to-Value Ratio. FHA loans tend to have higher loan-to-value ratios than conventional mortgage loans. To explain why, it’ll help to explain what FHA loans are and why they exist. fha stands for Federal Housing Authority. The FHA is part of HUD, the U.S. Department of Housing and Urban Development.
Fha Mortgage Guidelines There are many myths that surround these loans because loan approvals were once much more stringent than they are today. First of all, FHA loans are not just for first-time homebuyers nor are there.
FHA loans also have some nice features that conventional do not. FHA loans are eligible for " streamline refinances " – which is a cheaper and quicker way to refinance your loan in a low interest rate period. FHA loans are normally priced lower than comparable conventional loans.
An FHA streamline refinance makes it easy to refinance your mortgage to a lower mortgage rate without the need for an appraisal, many of which happen to come in low these days. In fact, if an appraisal is conducted and it’s not favorable, the FHA will even allow lenders to ignore it and set it aside.
FHA loans are not available for second homes or investment properties. In most counties, the FHA loan limits are less than conventional loans. FHA Loans and Mortgage Insurance. Mortgage insurance is an insurance policy that protects the lender if the borrower is unable to continue making payments.
Ultimately, streamline refinance loans. FHA vs Conventional Loans:.
Buying A Homes With Fha Financing To fund that obligation, the FHA charges borrowers (that’s you) a fee. Home buyers who use FHA loans pay an upfront mortgage insurance premium (MIP) of 1.75 percent. Borrowers also pay a modest ongoing fee with each monthly payment, which depends on the risk the FHA takes with your loan.Getting A Fha Loan Another eye-opener Is that an FHA streamlined refinance loan does not require you to get a home appraisal. If that doesn’t get a cash-strapped homeowner’s attention, the FHA will also work with.
The FHA streamline and VA streamline programs are much easier than conventional refinances because they require almost zero documentation. But to use them, the homeowner has to fit into quite narrow criteria.
I currently have a FHA loan for my first home and am exploring the idea of refinancing with the goal of getting a better rate, lowering monthly.