Conventional Refinancing

A conventional loan is available in fixed rate and adjustable rate.

Whether your current home loan was acquired through an FHA home loan, USDA home loan, VA home loan, or even a different conventional loan, there are several options available for home loan refinancing through the flexibility of conventional home loan refinancing. By implementing a conventional home loan for refinancing in lieu of settling on unfavorable loan requirements surrounding competing home loan refinancing options (VA home refinancing, FHA home loan refinancing, or USDA home loan refinancing, etc), many homeowners are able to reduce monthly fees if not eliminate them altogether. Furthermore, a conventional home loan used for refinancing can also lead to no mortgage insurance (MIP/PMI) being deemed mandatory; as long as at least 20% (or more) of equity has accrued in the home being refinanced.

Fixed Rate Conventional Home Loan Refinancing

As many homeowners who have implemented a fixed rate for the conventional refinancing of their home will attest to, there is great solace to be found in the fixed rate of the home loan’s refinancing because it affords the borrower a better medium in which to budget their expenditures. This ability to properly budget is not solely beneficial to the homeowner in regards to the principle and interest rates associated with their conventional home loan refinancing but also can be applied to the overall budget that determines their general financial fluidity. Considering that a major portion of the home loan’s initial payments are dedicated towards balancing the interest of the home loan, it can be extremely advantageous for a homeowner to opt for a fixed-rate when refinancing their home through conventional home loan refinancing means.

Adjustable Rate Conventional Home Loan Refinancing

Most often, homeowners decide to refinance their conventional home loan from a fixed-rate to an adjustable-rate refinanced home loan in order to exploit lower introductory rates and potentially reduce interest rates in the short-term. Additionally, for homeowners who are speculating (or strongly considering) about selling their home, it’s often prudent to refinance the home’s current (fixed-rate) conventional home loan into an adjustable-rate conventional loan/mortgage to circumvent the likelihood of payment increases by coordinating refinance dates to correspond with closing/selling dates of the home’s transfer. Also worth noting is that while the housing market does fluctuate in terms of property value, home loan eligibility, or even predilection for home acquisition, switching to an adjustable-rate conventional loan for refinancing affords the owner more flexibility regarding the (re)sale of their home in the future.

Difference Between Conventional and Non-Conventional Loans

While there are several similarities between conventional home loans aimed at refinancing a property and those that are offered through other means, the most tangible difference is apparent when one considers the “backing” or endorsement of each of the home loans, respectively. For example, a conventional home loan that is obtained for home refinancing does not have the safeguard of governmental support as those obtained through the FHA, VA, or USDA. Initially, that may seem worrisome to many would-be borrowers seeking to refinance their home through conventional home loan refinancing methods, however, it does afford certain benefits that are not immediately obvious; such as reduced down payment requirements, lower interest rates, and enviable home loan terms.

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