Refinancing Basic Options

FHA refinancing, VA refinancing, and conventional home loan refinancing all work in ways that can be similar, but with major differences in terms of interest rates, terms, and other fine details.

For example, you can never be penalized for an early payoff of a VA loan or refinance loan. The lender cannot charge you for the privilege of paying the loan off early. FHA and VA refinance loan interest rates can be more competitive than conventional refinance loan rates, so it’s a very good idea to compare interest rates between participating lenders and conventional lenders for the same type of loan product. You’ll get a very good idea about what’s available and what’s better for you in terms of sheer numbers.

FHA and VA refinance loans don’t require a down payment, but if you are looking for a new home and explore your options you will find the VA requires no money down in most cases, the FHA requires a much smaller down payment than conventional lenders, and conventional new purchase loans can require as much as 20% down depending on the transaction, the lender, and your credit history/credit rating.


The VA loan program is only open to qualifying borrowers who have served a minimum amount of time in the military, so not all refinance loan or new purchase loan applicants will be able to take advantage of this option.


The FHA loan program is for all qualified borrowers with credit scores 500 or higher. The FICO score requirement for FHA refinance loans can be a bit misleading to borrowers who don’t understand that FHA FICO score requirements are not the same as lender FICO score requirements. The lender is free to require a higher FICO score than the FHA minimum so long as that requirement is made in conjunction with federal law.


FHA loans feature more competitive interest rates than conventional loans because the U.S. government backs a percentage of the refinance loan to make it less of a risk to the lender. That is why you have a lower down payment with a new purchase FHA loan, and cash-out refinance options too. As long as you credit qualify for a new FHA cash out refinance loan you can refinance a conventional, VA, or othe non-FHA mortgage as well as an existing FHA loan.

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