Refinancing Low-Interest Rate FHA Loans To Conventional Mortgages

This BLOG On Refinancing Low-Interest Rate FHA Loans To Conventional Mortgages Was PUBLISHED On April 30th, 2019

The mortgage process cannot be completed overnight. It is a true process.

• Many homeowners who underwent the mortgage process do not want to repeat it
• The countless of documents required
• Some borrowers had underwriters who asked conditions after conditions
• Others had delays in the clear to close and closing date due to one reason or another
• Many homeowners who closed on their home loans in the past few years closed them with high mortgage rates
• Other borrowers had to close with FHA Loans and are currently paying high annual FHA Mortgage Insurance Premium

The good news for homeowners is that home prices have been increasing year after year since 2013.

Booming Economy And Housing Market

Many counties in the U.S. have seen home prices appreciate double digits year after year:

• The Federal Housing Finance Agency (FHFA) has increased conforming loan limits for three years in a row due to rising home prices
• HUD, the parent of FHA, has followed FHFA and increased FHA Loan Limits for three years in a row
• The increase, again, was due to high home prices
• Homeowners can take advantage of rising values of their homes in refinancing low-interest rate FHA Loans to Conventional Mortgages to avoid FHA MIP
• Mortgage rates have dropped to its lowest rates since the 2008 Real Estate and Credit Collapse
• Mortgage Rates are now at a 21 month low

In this blog, we will discuss Refinancing FHA Loans to Conventional Mortgages to avoid the high priced lifetime FHA mortgage insurance premium.

Benefiting By Refinancing Low-Interest Rate FHA Loans

There are times when homeowners will benefit by Refinancing Low-Interest Rate FHA Loans.

• For example, it may benefit Refinancing FHA Loans to a higher mortgage rate Conventional Loan if the borrower can eliminate the high FHA mortgage insurance premium
• Conventional Loans do not require private mortgage insurance if the borrower has 20% or more equity in their homes
• Refinancing Low-Interest Rate FHA Loans with a 3.5% rate may seem like a deal of a lifetime
• However, getting a conventional loan with a 4.0% mortgage rate and eliminating the annual 0.85% annual FHA MIP may offer a better net tangible benefit to the borrower
• FHA requires a 0.85% annual mortgage insurance premium for the life of a 30 year fixed rate loan
• A higher conventional mortgage rate may be a lower monthly payment without the FHA MIP
• This holds true for larger loan amounts where the 0.85% can make a large percentage of the monthly mortgage payment
• Homeowners should do a cost analysis in refinancing their FHA Loan to a conventional loan and avoiding MIP

Just because they have a low FHA rate does not mean they cannot benefit by Refinancing Low-Interest Rate FHA Loans to a higher rate conventional loan and avoid paying mortgage insurance.

Mortgage Rates Today

As mentioned earlier, mortgage rates today are at a 22 month low. Many homebuyers who purchased homes last year got rates north of 5.0%. There are many homebuyers who got non-qm loans at high mortgage rates. To get a free consultation cost analysis in refinancing your current mortgage, please contact us at Gustan Cho Associates at 800-900-8569 or text us for faster response. Or email us at gcho@gustancho.com. We are available 7 days a week, evenings, weekends, holidays.