Conventional Refinance Program

Conventional Refinance Rates and 2013 Guidelines

A conventional refinance could be the right loan for you. Low fees and rates. Photo courtesy Pawel Gaul/

A conventional loan is simply a mortgage loan that is not backed by the federal government. Basically, any loan that is not owned by FHA, VA or USDA is a conventional loan. Most conventional loans are owned by lending institutions Fannie Mae and Freddie Mac.

Conventional loans, also often referred to as conforming loans, offer distinct advantages over government-backed loans such as:

  • No mortgage insurance with 20% or more in equity.
  • No upfront mortgage insurance premium or funding fee.
  • Available for second homes and investment properties.
  • Cash-out refinances are allowed.
  • Conventional mortgage insurance is often less expensive than FHA mortgage insurance.

Conventional refinancing options are popular with consumers with strong credit history, good income and good assets. For this type of borrower, a conventional refinance can be a great option.

Talk to one of our experts to see if you qualify for a conventional refinance.

The FHA or Conventional Refinance Dilemma

Generally, choosing between a conventional and FHA refinance for your home is the frequent, most common dilemma that faces many homeowners.

Here are some quick facts to know when deciding between these two programs:

  • Conventional refinancing is generally utilized by homeowners with better credit scores and at least 20% equity in their property. 
  • Conventional loan private mortgage insurance (if refinancing with less than 20% equity) is cancellable when you reach 80% loan-to-value.
  • FHA mortgage insurance requires is payable for the life of the loan in most cases, as of June 3, 2013.
  • FHA Streamline refinance loans can take less time than conventional loans to close, but you must already have an FHA loan.
  • FHA streamline refinances are easier, but they come with the additional cost of mortgage insurance.
  • You may qualify for an FHA refinance if you have less-than-perfect credit. 

To find out more about the differences between FHA and conventional loans, talk to one of our knowledgeable experts.

Check FHA and conventional loan rates in your area.

Mortgage Rates – An Important Factor to Consider

Conventional Loan Advantages and 2013 Guidelines

Conventional loans don’t require mortgage insurance with 20% equity. Photo courtesy Tomasz Rzymkiewicz/

FHA and conventional refinance loans differ significantly by mortgage rate. The FHA 30-Year Fixed mortgage rate is generally lower than the conventional rate. However, the rate itself shouldn’t be weighed in isolation. FHA usually requires mortgage insurance for the life of the loan, which increases the entire loan cost significantly.

So even though you get a better base rate with FHA, the overall costs of a conventional loan might be lower.

Check today’s conventional loan rates.

FHA also requires an upfront mortgage insurance premium – which raised to to 1.75 percent of your loan amount as of January 2013. This means that the cost-benefit of using an FHA loan over conventional might not be as straightforward as it appears. As with many other financial decisions, using a conventional refinance is a cost-benefit calculation for you and your home.

Speak to a lender who knows about both FHA and conventional loans.

Conventional Conforming Loan Guidelines for 2014

A conventional loan is typically best for those with a minimum credit score of 660 to 680, have good equity in their home, and can prove current income and assets.

Unlike government-backed loans, you can use a conventional loan to refinance a second home or rental property. You can also open a bigger loan than what you currently owe which gives you cash at closing.

The 2013 conforming loan limit is $417,000 for most areas, but can be much higher for high-cost locales. For instance, in Los Angeles, California, the limit is $625,500. In Seattle, Washington, the limit is $506,000. Speak to a loan officer to find out the limit in your area.

If you don’t have enough equity in your home, you still may be eligible for a conventional refinance by using the HARP program.

Check today’s conventional loan rates.

The Advantage can help sort out the conventional versus FHA decision making process for you quite easily. By connecting you to one of our respected lenders, you will quickly get the best answers to your questions. We will match your loan conditions with a lender who can help you immediately. The mortgage professional will contact you and walk you through the process. Representatives are standing by to assist you.