Mortgage rates have been steadily dropping the past several weeks and it seems like the trend is continuing. With mortgage rates dropping, those borrowers who closed their mortgage loans mid last year at the peak of high mortgage rates are now given the chance to refinance. Conforming mortgage rates have dropped to 4.125% last week. Conforming 15 year fixed mortgage rates have dropped to 3.25%. Those with mortgage rates at 5.0% or higher should definitely contact their mortgage loan officer to see if they can do a cost analysis whether or not it is feasable to refinance their home loan. Mortgage rates are now at a 15 month low.
30 Year Fixed Mortgage Rates At 4.125%
If you are a prime mortgage loan borrower with at least a 740 FICO credit score, 20% or more in equity or 20% or more down payment on a home purchase, and conforming debt to income ratios, you can most likely lock your mortgage rate at 4.125%. Those with lower credit scores, higher loan to value, higher debt to income ratios, will most likely get rate adjustment and pay a higher mortgage rate. For prime credit 15 year fixed mortgage loan borrowers, the current mortgage rate is at 3.25%. These mortgage rates are national averages and vary from state to state.
FHA loans, VA loans are not credit score sensitive like conventional loans because these loans are backed by the Federal Housing Administration and the Department of Veterans Affairs respectively. HARP loans are not credit score sensitive either.
Converting FHA Loan To Conventional Loan
Now is a good time to explore refinancing your current FHA loan to a Conventional loan to eliminate the high cost of FHA’s annual mortgage insurance premium. FHA annual mortgage insurance premium is 1.35% of the mortgage balance. For a mortgage loan borrower with a $200,000 FHA mortgage loan, the mortgage loan borrower will be paying $225.00 per month in FHA mortgage insurance premium, no matter how low the loan to value is. There is private mortgage insurance required for conventional loans with higher than 80% loan to value, however, private mortgage insurance is almost half those of FHA mortgage insurance premium and the homeowner can cancel private mortgage insurance when they have at least 20% equity in their home. There is also Lender Paid Mortgage Insurance, also known as LPMI, where the homeowner does not pay mortgage insurance even if their loan to value is higher than 80% in lieu for a slightly higher mortgage rate. With mortgage rates as low as they are, FHA mortgage loan borrowers should definitely consider refinancing their FHA loans into a conventional loan.
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