0
Hi Penny, Unfortunately, without knowing the details of your credit situation it is impossible to know which loan is “better”. What you should ask your lender to do is to put all available loans side by side (assuming that you qualify for both)so that you can make an informed decision. Consider how long you plan to own the property, the closing costs you are paying, the benefit of the cash out, the cost of mortgage insurance (both upfront and monthly with FHA), and the interest rate and terms of both loans. It sounds as though you are in a good equity position, and that it may be possible to consider loans aside from FHA – make sure that you consider ALL options before making a decision. Get the advice of several LOCAL lenders, and go from there. (If a lender tells you that they cannot provide you with a quote for a specific loan type, ask them why – understand what they are offering, why, and what you might be able to change about your request so that more options become available).
11 months ago
Penny Harrell
said:
Thanks to both of you for your responses, as our credit standing is great (no problems) we are currently going to ask our lender about going conventional since we will still meet the 20%/80% requirements. Just wondering now about the 3.75 interest rate that is being offered? Thanks bunches!
11 months ago
Ted Rood
said:
@Penny Harrell 3.75% is about best execution rate these days, meaning it is the point in the rate sheet where pricing is best. With good credit and 20%+ equity, you should be able to obtain 3.75% with no points, and with the lender giving you a lender credit that will help cover your closing costs to at least some extent.
11 months ago
Penny Harrell
said:
@Ted Rood Great news, thanks so much! My husband said we would only be out of pocket around 500 for the new appraisal and we need that!
11 months ago
Ted Rood
said:
@Penny Harrell Hey Penny,
Make sure you are aware of the difference between closing costs and cash due at closing! Best way to know what you’re being charged is to look at the old loan payoff and the new loan amount. The difference is the total of costs your rolling into the loan and the new escrow account (if you’re escrowing). Just because you’re only paying for the appraisal out of pocket doesn’t mean there aren’t other costs included in the loan. This doesn’t necessarily mean you’re getting a bad deal, you just need to be aware of what is being added to your loan.
Hard to answer this without knowing credit scores as there are pretty severe credit based pricing adjustments for conventional cash out loans. In general, the higher your credit scores, the more incentive to go conventional. You cannot borrow more than 80% of the home’s value on a conventional cash out.
My husband and I are refinancing our FHA loan of 5%, this is the second refi the last one was in 2010 to get it to 5%. We have our first appraisal that was done when we bought our home of 3000 square ft. with 1 and ½ acres which cost us 325,000 and owe 199,000 now, it appraised from outside only at 285,000,but the initial appraiser never came in our house. He came when we were gone. We have 4 bedrooms and 3 bathrooms with many amenities. We are currently going to have a new appraisal done this week with wells fargo and want to do a cash out refinance of 28,000. What would be the best type of loan for us to refinance with? Conventional or stay FHA? Thank-you!
2 1