One of the trickiest aspects of buying a new house is finding the right mortgage. If you did not have the money you needed for your down payment or were a first time home buyer, you probably had to settle for a loan with a higher interest rate or increased monthly payments that are not ideal for your finances. However, with FHA refinancing and conventional refinancing, you can renegotiate the terms of your mortgage to get affordable rates that better suit your needs. At BrightPath, our experienced FHA streamline loan refinance and conventional loan officers will help you understand the differences between these refinancing options to determine which will work best for you.
What is an FHA Streamline Loan?
According to mortgage lenders in Georgia, an FHA streamline loan is a type of refinancing that allows you to lower your interest rates and monthly payments on an existing FHA loan. You may have opted to get an FHA loan because it has lenient credit requirements and lower down payments, but the tradeoff is that you end up paying a higher interest rate. An FHA streamline loan can lower your interest rate and monthly payments to help you pay off your mortgage faster. Also, if you have an adjustable rate mortgage, an FHA streamline loan allows you to switch to a fixed rate mortgage so that your monthly payments are much more secure and predictable.
The Advantages of an FHA Streamline Loan
Mortgage lenders in Georgia are big advocates of FHA streamline loans because of their many benefits. Unlike conventional loans, they do not require credit score verification, so they are a great option if you have a lower credit score or a history of unemployment. And since you do not need to provide as many documents, the process of getting approved has a quick turnaround of two to three weeks. Also, if your home is not appreciating at a high value or has depreciated since you bought it, you can use the original price of purchase for the current home value.
FHA Refinancing vs. Conventional Refinancing
The differences between FHA refinancing and conventional refinancing come down to credit score, home equity and proof of income. If your credit score is under 620, you do not have 20% equity in your home and you do not want to provide proof of income, then FHA refinancing will be better for you. But, if you have a good credit score, have at least 20% equity in your home and can provide proof of income, then a conventional loan is the best option.
It’s important to note that a conventional loan may be better in the long run as an FHA loan comes with some hefty interest fees to make up for its initial benefits. If you do being with an FHA loan, you may want to refinance to a loan that gives you better interest rates down the road.
It is essential to weigh your goals when choosing between an FHA refinance and a conventional refinance according to mortgage lenders in Georgia. if you would like a cash out refinance and do not qualify for a traditional loan due to your credit score, pursue an FHA streamline loan. However, if you want to get rid of your mortgage payments or take cash out and have a minimum of 20% equity in your home, then a conventional refinance would be the way to go.
Learn More About FHA Refinancing with Mortgage Lenders in Georgia
No matter which type of refinancing is the best fit for you, the experienced loan officers at BrightPath will use their professionalism and expertise to get you through the process. Contact us today to schedule your free consultation and learn more about your refinancing options.
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