Mike Lubbers

NMLS # 305004

801-272-0600

mike@advancedfunding.com

Mike Lubbers Mortgage Loan Advisor
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CONVENTIONAL REFINANCE

CONVENTIONAL Refinance Loans




A Utah conventional refinance loan is available with a fixed rate or adjustable rate. Conventional loans are usually available from 5-year to 30-year terms, a 40-year term may also be available in certain situations. A conventional loan is a mortgage loan that's not backed by a government agency. Conventional loans are broken down into "conforming" and "non-conforming" loans. Conforming conventional refinance loans follow lending rules set by the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac). However, some lenders may offer some flexibility with non-conforming conventional loans.

 

Fixed Interest Rate

A conventional fixed rate mortgage is offered with multiple loan terms. With just a 3% down payment for a primary residence loan, you can qualify for a conventional loan up to the allowed loan limits. Payments made are based on the fixed interest rate at the time the loan was originated, locked, and closed based upon the principal loan amount which is amortized over the term of the loan.

You can use a conventional loan to refinance up to 95% of your property’s current primary home value. A conventional fixed rate refinance can also be used for second homes or investment properties, up to four units. At any time you can pay your loan off, or reduce the balance early, without a pre-payment penalty.

If your monthly budget allows, and if you are looking to pay off your home faster, rates are lower on a 15-year loan versus a 30-year loan, other loan terms are available as well. This would decrease your overall loan interest payments while increasing your monthly payment.

Adjustable Rate Mortgage (ARM)

A conventional adjustable rate mortgage allows you to capitalize on the lowest interest rate available, with a fixed term for five, seven, or 10 years. After the initial fixed term is up, your monthly payment will increase or decrease annually, based on the interest rates at that time. There are caps limiting the amount that your interest rate can increase above your initial interest rate, it can increase more than 2% per year and 5% over the life of the loan.

You can use a Utah conventional refinance up to 95% of your property’s current primary home value. A conventional ARM refinance can also be used for second homes or investment properties, up to four units. At any time you can pay your loan off, or reduce the balance early, without a pre-payment penalty.

Conventional Loan Differences

Non-conventional loans typically include loan programs from government agencies such as the Federal Housing Administration (FHA), the Department of Agriculture (USDA), and the Department of Veterans Affairs (VA). Conventional loans, on the other hand, refer to the types of mortgages that do not fall under any specific government loan program.

Many homeowners prefer conventional loans for their low-interest rates, flexible loan terms, and being able to avoid or eventually eliminate mortgage insurance. These homeowners often discover that they may have a lower monthly payment with a conventional loan—whether it has a fixed or an adjustable rate.

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