As most people are probably aware, property values in Colorado have risen dramatically since 2013. For homeowners who purchased their home utilizing a CHFA or FHA loan, now is an incredible time to refinance into a conventional loan. The reason this is beneficial is because you may now remove your mortgage insurance, pay off your 2nd mortgage and possibly reduce your interest rate as well. The goal is to save a few hundred dollars per month or even more.
In addition, you can skip 2 monthly mortgage payments and get up to $2,000 cash back as well. The combination of all these benefits is a very unique opportunity because it’s very rare to have low rates and high property values at the same time. This truly is an opportunity to take advantage of.
A conventional loan is not much different from a CHFA or an FHA loan except mortgage insurance can be removed with as little as 5% equity. Typically a high credit score(above 660 fico) will be important because unlike CHFA and/or FHA loans, conventional loans are driven by credit score and equity. If you purchased your home in the last couple of years, your mortgage insurance is for the life of the loan and can never be removed. Doing a conventional loan is the only way to remove it.
Conventional 30 year rates are currently hovering at or under 4% which means you can now remove mortgage insurance and probably lower your interest rate as well. This will dramatically lower your APR and save you tens of thousands of dollars in interest on top of a nice monthly savings. CHFA homeowners who are currently at or above 5% may also want to consider a 15 year loan because their payment will probably not increase by much due to a dramatic reduction in interest rate and the removal of the MI.