Refinancing is one of the more common options when it comes to FHA loans for those trying to avoid mortgage insurance altogether. All FHA loans taken since 2015 will have monthly PMI for the life of the loan. Once you reach 20% equity in your home, there is no reason to stay on your FHA loan anymore. refinancing into a Conventional loan without the need for the private mortgage insurance (PMI) anymore will serve as a big incentive on its own to refinance.
Additionally, conventional mortgages may often come with better rates, depending on your credit score and the amount of equity you have, among other things.
To switch from an FHA loan to a conventional loan, your debt-to-income ratio (DTI) should be around 50% or lower to give you the best chance of approval, and you will need a minimum 620 credit score or better. The credit requirements could be a downside for some because the FHA is a bit more lenient.
While a refinance from FHA Loan to a Conventional Loan can save you money by dropping your monthly PMI ( personal mortgage insurance) and possibly allowing you to get a lower interest rate (or both), 100% of your closing costs from refinancing can be rolled into the new conventional loan too.
While many homeowners either purchased or refinanced for a lower rate with an FHA Loan in the last two years, the market since 2020 looks much different now. Everyone’s home equity has increased by 30% or more. Also, Interest rates have been on the rise, the time is now to schedule a 30-minute call with me, I’m looking forward to showing you your savings. I can provide your approval to convert your loan in 24hrs of our call. I will crunch the numbers to figure out if you would qualify for enough savings to go through the work of switching to a conventional loan right away for you.
The typical loan processing time to close is 25 – 30 days.
American Nationwide Mortgage Company
100 State Road 13 N Suite D, Saint Johns, Florida 32259
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