Best time to refinance Conventional Mortgage
Not only are FHA and VA Mortgage rates at historical lows, this is also the best time in history for conventional mortgage refinances also.
A conventional mortgage is a type of mortgage in which the terms and conditions of the loan meet the criteria set forth by Fannie Mae and Freddie Mac. Most people who have a conventional mortgage may not know that it is classified as “conventional” but most likely chose this type of mortgage because:
- credit scores were 680 or higher
- down payment was 5%-10% minimum
- or they had 20% down payment or equity in the house
- were wanting to get rid of PMI (mortgage insurance)
- their house value was high enough compared to their loan amount
This is the best time to refinance conventional mortgages due to historically low rates.
Types of Conventional Mortgages
A conventional mortgage can be defined as either afixed-rate mortgage (FRM) or an adjustable-rate mortgage(ARM). A fixed rate mortgage is classified as having the same principal and interest payment for the life of the loan, while an ARM is identified by having a fixed rate for only a specified period of time before the rate becomes variable, depending on market conditions.
Many times, people confuse a conventional mortgage with a conforming mortgage. However, a conventional mortgage can be both conforming or non-conforming (jumbo). Because conventional loans are set by Fannie Mae and Freddie Mac, the easiest way to identify if a loan is conventional or not is to know whether or not the loan is government insured.
Typical government-insured loans are FHA (Federal Housing Administration), VA (Veterans Affairs) or USDA (United States Department of Agriculture) Rural Development loans. Fannie Mae and Freddie Mac are considered stockholder-owned corporations.
The most common conventional mortgage terms are fixed for 30 and 20 years, however, Peoples Bank offers the additional flexibility of fixed-rate loans for 10-, 15-, 25- and 40-year terms. Total Mortgage offers 3/1, 5/1, 7/1 and 10/1 ARMs.
Please call today to see if now is the best time to refinance your conventional mortgage or refinance into a conventional mortgage.
