Conventional loans typically carry lower rates than FHA loans. A good credit score, stable income, and other criteria could qualify you for a lower interest rate reducing your monthly payment amount.
You can buy a primary home residence, second home, or rental property with most conventional loans.
Conventional loan limits are higher than those offered through FHA or VA financing. For 2022, the conforming loan limit has been increased to $625,000 from $548,250 in 2021.
With a conventional loan, there are various mortgage repayment periods to consider. Each repayment term offers different mortgage rates. Ultimately, the faster your repayment term, the lower your mortgage rate will be. Conventional loans offer multiple repayment terms, whereas FHA loans don’t offer nearly as many options.
The potential benefits of rate-and-term refinancing include securing a lower interest rate and a more favorable term on the mortgage; the principal balance remains the same. Such refinancing could lower your monthly payments or potentially set a new schedule to pay off the mortgage more quickly.
Depending on how much equity you’ve accrued in your home, you may be able to walk away with a serious lump sum of cash. What you do with that cash is up to you. Some popular things people use this money for are financing college, funding a major renovation or paying off high interest credit cards – it’s your call.
Disclosure: By refinancing your current mortgage loan, your total finance charges may be higher over the life of the loan