Jul 17 2007
Florida cash out refinance. VA home loan or FNMA conventional loan
Interesting things happen when home owners call us regarding mortgage financing. We ask enough crucial questions which in turn helps educate consumers on which mortgage program best suits their needs.
Take for example the clients who called yesterday asking simply to refinance their existing VA home loan to lower the rate and consolidate some debts. Since they were only considering borrowing about 55% of their fair market value; it made sense to consider a FNMA conventional loan as well.
With a VA loan the advantages are; no private mortgage insurance (PMI), no prepayment penalty, and you can reduce their original 30 year fixed rate VA home loan to a 25 year term to save even more money. The only red flag to consider with a cash out refinance using VA is the VA Funding Fee of, in this case 3.35% of the loan amount, or $3,4852.50. This amount is added to the loan amount and the borrower would pay additional interest over 25 years.
On the other hand, a conventional FNMA mortgage offers the same no prepayment penalty, no PMI and reduced term of 25 years. The advantage is there is no VA Funding Fee to add to the loan amount. Our home owner now saves $3,482.50 and still enjoy the same amount of cash out they requested. Oh, and the interest rate is lower too with conventional FNMA mortgages.
It does pay to talk to a mortgage professional who has the experience needed to assist home owners in their mortgage decisions. If you want to learn more about how to save money on your next mortgage search, call or email me anytime.