FHA loans offer a excellent way to purchase a home with a low down payment. One drawback to FHA loans is that the mortgage insurance premiums required on them. Lenders who underwrite loans to Fannie Mae or Freddie Mac, the country’s two largest government-backed mortgage investors, do not require mortgage insurance when the loan amount is less than 80% of the home’s value. This advantage alone could save the homeowner hundreds of dollars per year.
Contact three to five mortgage lenders and request them to provide you a quote for your refinance. Explain that you want to refinance out of your FHA loan and right into a traditional loan. Ask they provide you the quotations in writing with a good-faith-estimate, or GFE.
Compare the quotes together with one another with the section referred to as”with the shopping graph” located on Page 3 of those GFE. Fill out this graph quotes provided by the creditors. Compare the loans side-by-side. Some loans may be loans; others may be adjustable rate mortgages. Determine which loan type is best for you based on how long you’ll live in the home (the ARM may be better for short term) and the affordability of the payments.
Call both lenders with the best terms and negotiate together. Ask them to decrease settlement fees and the interest rate. Explain to them that they’re for your business in competition with one another. Apply with the lender who offers you the best overall combination of a very low interest rate and low prices. Work together with the creditor during the procedure until the loan receives the last acceptance and closes.