Conventional Fixed-Rate Refinance

FHA vs. Conventional Refinance

• All FHA loans must have Mortgage Insurance Premium (MIP)
• Conventional loans sometimes have Private Mortgage Insurance (PMI) if there is a down payment of less than 20%
• Conventional refinances allows you to cancel MIP/PMI

Adjustable Rate Mortgage (ARM) vs. Fixed-Rate 

• ARMs have a rate that is fixed for an initial period
• ARM interest rates change after the fixed period ends
• Fixed-Rate mortgages are set when you take out a loan and will not change

What is a Conventional Fixed-Rate Refinance Mortgage?

A conventional fixed-rate refinance mortgage is a type of mortgage that allows you to replace an existing loan with a new one that has a fixed interest rate for the life of the loan. This means that the your monthly payments will remain the same for the entire term of the loan, regardless of changes in the market interest rate.

To qualify for a conventional fixed-rate refinance mortgage, you must typically have a minimum credit score of 620 and a low debt-to-income (DTI) ratio. A conventional fixed-rate refinance can be a good option if you are looking to lower your monthly mortgage payments, stabilize your monthly payments, or pay off your mortgage faster.

What are the benefits of a conventional fixed-rate refinance?

You can save money by reducing your monthly mortgage payment when refinancing from an FHA loan to a conventional loan. If you currently have an FHA loan, you pay for Mortgage Insurance Premium (MIP), an insurance required on most FHA loans. Although some conventional loans have Private Mortgage Insurance (PMI), an insurance used on some conventional loans when putting less than 20% down payment, you can refinance your conventional loan so that you no longer have to pay for PMI.

You may also find more stability from a conventional refinance if you currently have an adjustable-rate loan. An adjustable rate mortgage (ARM) will have fluctuating monthly mortgage payments. When refinancing from an ARM into a conventional fixed-rate mortgage, the monthly payment of principal and interest will stay the same throughout the life of the loan. This can make it easier to set your monthly budget and can also provide peace of mind.