Conventional, VA and FHA Mortgage Refinance | refinance debt

There are pros and cons to obtaining a conventional, VA or FHA mortgage loans. The guidelines for these home loans change on a regular basis, therefore it can be very difficult to keep up with all of the new revisions. There are certain things that will determine which type of loan will be best of you. Some of these include your credit score, income, loan to value of your house or how much money you have to put down if you are purchasing a home.

Conventional Mortgage Refinance

A conventional mortgage refinance used to be one of the most popular loans to obtain since you could split it up into an 80/20 and not have to pay mortgage insurance. Conventional appraisals are also not as strict on their guidelines as FHA. With the economy being very slow and people not having a lot of money to put down on their homes, conventional loans have started to slowly diminish over the years. Many lenders have also tightened up their guidelines for credit scores which has stopped many people from being able to obtain a conventional mortgage. If somebody cannot put down 20 percent on a home, the monthly mortgage insurance on a conventional loan is very high. The monthly insurance premium can range from 1 percent to 2.5 percent of the monthly payment. This huge cost can really impact whether somebody can qualify for the loan based on their debt to income ratio. People that are able to put down 20 percent on a home or mortgage refinance and have at least 20 percent in equity, a conventional loan is their best option to chose from. Some lenders offer a 40 year term on these or an interest only option which allows for the homeowner to better afford their monthly mortgage payment.

FHA Mortgage Refinance

FHA mortgage refinance started to become very popular in the 1990?s. The real estate market started to take a huge turn and the prices of homes started to sky rocket. Many people were then unable to afford a home and needed mortgage refinance where they did not have to make a large down payment. FHA loans are also great for a young person who is just starting out and does not have a lot of money saved to put down on a home or if they want to receive a gift from somebody as part of their down payment. A person purchasing a home with an FHA loan can also have the seller pay up to 6% of their closing costs. This can save the home buyer thousands of money or help them to qualify if they don?t have the money for the closing costs. The down payment on an FHA loan is 3.5 percent and the up front mortgage insurance premium is 1.75 percent. The monthly mortgage insurance cost is.55 percent. An FHA loan is still a great option for a first time homebuyer and the guidelines on credit are not as strict as a conventional loan. The majority of lenders now are requiring at least a 620 or higher credit score to qualify. FHA also offers a program called an FHA streamline, where a homeowner can refinance their mortgage into a lower interest rate without paying the high cost of a regular refinance. Most lenders also don?t require another appraisal to be done on the property when a homeowner does an FHA streamline. The homeowner must have at least 12 months of on time mortgage payments to qualify for this type of refinance.

VA Mortgage Refinance

A VA mortgage is a great way for a Veteran to obtain a home loan without much out of pocket expense. A person obtaining a VA loan does have to have excellent credit, but many lenders are requiring at least a 600 credit score. There is no monthly mortgage insurance premium on a VA loan, which really saves the homeowner a lot of money on their home loan payment. The VA does require a funding fee be paid on the loan at settlement. For a purchase this funding fee is 3 percent and for a refinance the funding fee is 1.5 percent. The Veteran is exempt for these funding fees if they are considered disabled by the VA. The funding fee can be rolled into the loan unlike an FHA loan. That saves the Veteran up front money if they don?t have it saved to put down on the home. The seller of the home can also pay this funding fee for the Veteran if they chose to.

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Source: http://refinance.maxmoneymarketing.com/debt/conventional-va-and-fha-mortgage-refinance/

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