Conventional Loans
(Fannie Mae and Freddie Mac)

Conventional Loans

Rate and Term Refinance

  • Up to 97% LTV (Loan-to-Value)
  • 620 Minimum Credit Score
  • Loan Terms from 10 to 30 Years
  • Monthly Mortgage Insurance
  • No Monthly Mortgage insurance at 80% or Lower LTV
  • Automatically Cancels at 78% LTV
  • $726,200 Maximum Loan Amount

Cash-Out Refinance

  • Up to 80% LTV (Loan-to-Value)
  • 620 Minimum Credit Score
  • Loan Terms from 10 to 30 Years
  • No Mortgage Insurance
  • $726,200 Maximum Loan Amount

Conventional refinance loans are mortgage loans used to replace an existing mortgage with a new loan that typically offers better terms or serves a different financial objective. These loans are not insured or guaranteed by a government agency like FHA or VA loans.

Here are some key points about conventional refinance loans:

  1. Purpose: Conventional refinance loans can serve various purposes, including:
    1. Rate and Term Refinance: This type of refinance aims to secure a lower interest rate or change the loan term (e.g., from a 30-year to a 15-year term) without taking cash out of the equity.
    2. Cash-Out Refinance: In a cash-out refinance, you borrow more than your current mortgage balance and receive the difference in cash. This can be used for various purposes, such as home improvements, debt consolidation, or other financial needs.
  2. Loan-to-Value (LTV) Ratio: The loan-to-value ratio is the percentage of the home's appraised value that the loan represents. Conventional refinance loans often have specific LTV ratio requirements. For example, a rate and term refinance may allow a maximum LTV ratio of 97%, while a cash-out refinance may allow for a lower LTV ratio, such as 80%.
  3. Credit Requirements: Conventional refinance loans generally have stricter credit requirements compared to some government-backed loans. Lenders will evaluate your credit history, credit score, and debt-to-income ratio to assess your eligibility and determine the interest rate you qualify for.
  4. Appraisal: In most cases, a new appraisal will be required for a conventional refinance loan to determine the current value of the property. The appraisal helps the lender determine the loan amount and whether it meets the LTV ratio requirements.
  5. Closing Costs: Refinancing typically involves closing costs, which include fees such as appraisal fees, title search fees, and other expenses. These costs can vary depending on the lender and the loan program. It's important to consider the closing costs when deciding whether refinancing is financially beneficial.
  6. Private Mortgage Insurance (PMI): If the new loan amount exceeds 80% of the home's appraised value, private mortgage insurance may be required. PMI is an additional monthly expense that protects the lender in case of default. However, if you have built enough equity in your home, a refinance may eliminate the need for PMI.

When considering a conventional refinance loan, it's important to assess your financial goals, review current interest rates, and calculate potential savings or benefits. Consulting with a lender or mortgage professional can help you understand the specific requirements, costs, and potential benefits of a conventional refinance loan based on your individual circumstances.

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