FAQ

There are several key differences between FHA and conventional loans.

Each has its advantages and drawbacks.

Here's a quick comparison:

CONVENTIONAL MORTGAGES

• Minimum FICO credit score - Typically no lower than 620
• Minimum down payment - As low as 3%, but 5% to 20% is typical
• Mortgage insurance - Monthly payments are required if you have a down payment of less than 20%, however, the mortgage insurance can be canceled when your loan-to-value ratio reaches 80%

FHA LOANS

• Minimum FICO credit score - Typically as low as 580
• Minimum down payment – As low as 3.5%
• Mortgage insurance – Upfront mortgage insurance premium and monthly mortgage insurance payments. The mortgage insurance is sometimes required for the duration of the mortgage term.

You do not have to pay income taxes on the money you get through a cash-out refinance.

Self-employed borrower’s ability to refinance is the same as any other borrower. Your qualifying factors will be based on credit, equity in your home, and your net income on your personal and business tax returns after expenses.

With points, you are paying additional cost to obtain a lower interest rate. When obtaining an interest rate with points, it is important to discuss the recoupment period with your loan officer. With lender credit, you receive credit to cover all or some of the loan costs.

Getting prequalified allows you to see an estimate of how much you can afford, and a preapproval takes it one step further by verifying the financial information you submit to give you a more accurate amount.

• Figure out how much you can afford
• Set a savings goal for the upfront costs
• Consider the length of the mortgage loan
• Know how mortgage interest rates work
• Shop mortgage lenders like you shop for shoes

Appraisals are not always required. Appraisals are waived in some cases through Fannie Mae or Freddie Mac’s automated underwriting system. There are many factors that play into your ability to receive a waiver such as credit, loan to value, transaction type, and how recently you refinanced your home.