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We are looking to refinance our house to a lower rate so we can pull some money out to fix things (replace windows, new front door, things like that). Right now I have a fixed rate conventional mortgage and the company I’m working with right now wants to put me in a fixed rate fha loan. Is there a big difference in the two? Is one better then the other? I’ve tried to google them but I haven’t really found an answer that helps me so I figured I’d ask here and see if anyone has any experience.
I actually ended up getting an FHA loan, and the mortgage guy couldn’t really explain to me what the difference between that and a conventional fixed loan was, only that the banks were giving a huge hassle about giving us a loan, even though I’ve got perfect credit, downpayment, etc, and FHA was just easier, albiet it takes a little bit longer. I know that doesn’t really help… 😕
Keeper of the Fledgings
Don’t quote me on this but I believe a conventional loan is a non-government or private type loan by a bank and an FHA loan is thru a government loan program like Freddy Mac or Ginnie Mae so I wouldn’t worry about either one
We have an FHA loan, also there are programs that allow you to refi your FHA loan later for no charge if rates drop below your interest rate, and all you have to have is consistent payments and no lates, credit standing isn’t involved at all.
Only frustrating thing has been since our last refi, who we pay the mortgage to has changed 4 times, and we just refi’d in Oct! How many times are they going to sell my freaking loan???
Refinancing is a big hassle and is actually harder to do than simply buying a house. They wanted every scrap of paper you could think of, demanded that certain things be paid off in full as part of the agreement, and dragged it out for 4 months. By asking for yet another scrap of paper, after I had gathered all the others. It was always “just one more thing”, couldn’t just ask for it all at once.
Be prepared for that and good luck.
Kyrin
back in 2003, when the mortgage rates nose-dived, I worked in taking mortgage loans for mortgage brokers over the phone–I did not work with FHA loans, but I do know that a straight REFI is a lot easier to get approved than a CASHOUT refi is, which sounds like what you are getting. With a REFI, you can only get $2000.00 cash back, after they have paid back your loan and closing costs, with a CASHOUT you can get more cash back, but the credit burdens are higher, getting approved is more difficult, and they do want a lot of specifics of what you are using the cash for, in this case, sounds like a Home Improvement loan. If you could get away with all this on 2000 or less, it might be better in the long run.
Kyrin wrote:Only frustrating thing has been since our last refi, who we pay the mortgage to has changed 4 times, and we just refi’d in Oct! How many times are they going to sell my freaking loan???Kyrin
This is how many lenders make their money; by selling of loans as a sort of “stock” to other companies. This is part of what caused the mortgage meltdown.
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