If you are like most first-time homeowners, your first mortgage was an FHA loan. Your FHA loan gave you the ability obtain financing, requiring only minimal down payments and fair-to-good credit scores. While this was a perfect fit for you at the time, you now may be looking to save some money. One way to do this is to refinance into a conventional loan.

One significant advantage of switching to a conventional loan is that, with the right loan-to-value ratio, it can eliminate mortgage insurance. While conventional loans have stricter credit requirements, and typically require borrowers to have at least 20% equity in their homes, any mortgage insurance provision cancels once your house reaches a 78% loan-to-value ratio.

Additionally, refinancing to a conventional mortgage may allow you to take out a larger home loan.

Refinancing does come with costs, such as closing fees, and may require you to present many of the same documents during the application process as you did with your original home purchase. Plus, you may also need to pay for an appraisal of your home.

Checklist: When Is a Good time to Refinance from an FHA to a Conventional Mortgage?

If you’re still not sure whether you should refinance from an FHA loan into a conventional mortgage? Take a couple of minutes to answer the following questions. They can help you decide if a refinance is right for you.

1. What are my goals?

2. Does refinancing make financial sense?

3. What is the current value of my home?

4. What is my existing home equity?

5. Can I afford the refinancing closing costs and fees?

6. Can I provide all of the necessary documentation?

Considering a Refi? Let us help!
Our expert mortgage consultants can help you evaluate your current loan situation and help you identify if a refinance is right for you. Give us a call today!

Source: PennyMac, Link

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Twin Cities — (January 2017) January brings out a rejuvenated crop of buyers with a renewed enthusiasm in a new calendar year. Sales totals may still inevitably start slow in the first half of the year due to ongoing inventory concerns. Continued declines in the number of homes available for sale may push out potential buyers who simply cannot compete for homes selling at higher price points in a low number of days, especially if mortgage rates continue to increase.

New Listings in the Twin Cities region increased 3.1 percent to 4,304. Pending Sales were up 4.3 percent to 3,130. Inventory levels fell 25.4 percent to 8,212 units.

Prices continued to gain traction. The Median Sales Price increased 4.7 percent to $225,000. Days on Market was down 7.1 percent to 79 days. Sellers were encouraged as Months Supply of Homes for Sale was down 30.4 percent to 1.6 months.

In case you missed it, we have a new U.S. president. In his first hour in office, the .25 percentage point rate cut on mortgage insurance premiums for loans backed by the Federal Housing Administration (FHA) was removed, setting the table for what should be an interesting presidential term for real estate policy. FHA loans tend to be a favorable option for those with limited financial resources.

On a brighter note, wages are on the uptick for many Americans, while unemployment rates have remained stable and relatively unchanged for several months. The system is ripe for more home purchasing if there are more homes available to sell.

Source: Minneapolis Area Association of Realtors®, Monthly Indicators Report. All data comes from NorthstarMLS. http://maar.stats.10kresearch.com/reports

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