Refinancing your FHA loan to a conventional mortgage may clear room in your monthly budget, especially with interest rates hovering at historic lows. Removing FHA monthly mortgage insurance, it could result in a lower monthly payment and big savings.
FHA Mortgage Insurance
By refinancing your FHA mortgage to a conventional mortgage, you may be able to get a lower rate and/or eliminate your monthly mortgage insurance. FHA monthly mortgage insurance is paid for the life of the loan regardless of how much equity you have, unlike a conventional mortgage.
Conventional loans allow mortgage insurance to be cancelled once you owe less than 80% of the home’s value and that is 80% of its current value, not what you paid for it. With today’s rising home values, you may be surprised how much equity you have.
How Much Equity Do I Have?
To establish 20% equity, you can either have a home appraisal that states you have 20% equity in your home (usually conducted during the refinance process) or pay down your current loan down to get to 20% equity.
The end result of refinancing could be a lower monthly payment and big savings. Contact us today for a mortgage review to discuss your refinance options.