Conventional Loans and Refinancing

Conventional and Refinance Loans from JustChoice LendingConventional Home Loan

Justchoice is licensed to serve the states of KY, TN, VA, WV, IN, MI, AL, MS, FL

Conventional home loans are generally on a fixed interest rate term and which generally meet the Fannie Mae (Federal National Mortgage Association) or Freddie Mac (Federal Home Loan Mortgage Company) criteria or guidelines. Conventional loans can be fixed-rate or adjustable rate and depending on the length of the mortgage, specific ones may prove to be better.

A fixed-rate mortgage has an interest rate that won’t change for the life of the loan. Adjustable rate loans feature a fixed interest rate for a small period of time, typically 3 to 10 years, and then fluctuate up or down for the subsequent years. ARM mortgages are typically sought by people who plan on moving from the house within a few years.

Conventional loans generally require better credit than government loans, particularly when the loan requested exceeds 80% of the value or sales price of the property to be financed. Mortgage rates for conventional loans tend to be slightly higher than government loans although they usually require less paperwork and thus are attractive to applicants who have money to put down and have good credit (above 720 avg. score).

Credit Score Requirement: A 640 credit score is required for a Conventional Home Loan. However, JustChoice Lending works with applicants to help them raise their credit scores to acceptable levels.

Terms: 15 year and 30 year mortgages are available

Property Eligibility: No geographical restriction but subject to product guidelines.

Refinance Loan

A Refinance Loan is a form of conventional loan (although government loans sometimes can be used in refinancing) in which a new mortgage loan is used to pay off a homeowner’s existing mortgage. There are various reasons to refinance including:

  • Moving from a fixed-rate mortgage with a high interest rate to a loan with a lower interest rate
  • Moving from an adjustable rate mortgage (ARM) to a fixed rate
  • Consolidating two mortgages into one
  • Moving from a long-term loan to a shorter-term loan to pay it off and build equity more quickly.
  • Moving from a short-term loan to a longer-term loan to reduce monthly payments.
  • Moving from an interest-only mortgage to a loan that pays down the principal.
  • To have extra cash to make a purchase or to pay off other debt.
  • Attempting to get a better rate because credit has improved

There are four main mortgage refinancing options available that can meet the needs listed above:

Cash-out or Cash back Refinancing

This plan allows you to refinance your mortgage for more than you currently owe, and the difference, the equity, is converted into cash for the homeowner.

Low Fixed-rate Loan

If you currently have a high fixed-rate mortgage and the rates have dropped due to market conditions, then you may want to refinance to a low fixed-rate loan. Also, if you have an ARM, you might consider this option in order to get the security of a fixed rate. Even if your adjustable rate is low now, it is not guaranteed to remain that way; but if you get a low fixed-rate loan, then you lock that low rate in for the life of the loan. This option is a good choice if you are not planning on moving within the next five years.

Shorter-term Loan

If your main goal is to quickly build up equity and to pay off your mortgage sooner, then the shorter-term loan is probably your best choice. A lot of times, if you refinance to this type of loan, your monthly payments will be higher, but you will pay substantially less interest and your mortgage will be paid off sooner. Also, you would benefit from a larger tax deduction on interest if you move from a 30-year fixed to a 15-year fixed loan. There are some cases, however, in which you may be able to refinance to a shorter-term loan without raising your monthly payment -if you’ve had your current mortgage for enough years.

Longer-term Loan

If your current monthly payments are higher than is comfortable for your financial situation, then you might want to consider refinancing to a longer-term loan. This will result in a decrease in your monthly payments, since you will have more time to repay the loan.

Examining your current mortgage and knowing how you would like to improve it are the first steps you need to take when starting the refinancing process. Once you know this, you can choose the option that will best help you achieve your goals.

Contact JustChoice Lending today to learn more about Conventional Home Loans or Refinancing by calling 866-367-0855.

Other eligibility requirements may apply. Please contact JustChoice Lending for a full list of requirements.

Loan Comparisons

LOAN PROGRAMCREDIT SCOREINCOME LIMITSPROPERTY ELIGIBILITY
USDA Guaranteed620+ for all borrowers. True no score w/ three alternative credit trade lines.Family Size: 1-4 $78,200 5-8 $103,200Follow this link.
FHA620+ for all borrowers.NoneAll areas eligible.
VA620+ for all borrowers. True no score w/ three alternative credit trade lines.NoneAll areas eligible.
Conventional640+NoneAll areas eligible.
Conventional No MI (KY Only) KHC680+$97,650KY Properties
USDA Direct640+ for all borrowers. True no score w/ three alternative credit trade lines.80% AMI for household sizeFollow this link.
Home Possible Advantage620+100% area median income (Unless in an underserved area)All areas eligible.

Other conditions may apply. Call JCL Staff for information on specialized funds.