Closing costs. One of the disadvantages of refinancing out of a FHA loan into a conventional loan are the closing costs. Closing costs are fees charged by lenders for originating the loan. The average closing costs are between 1.5% – 3% of the loan amount. On a $200,000 mortgage the closing costs can be as high as $6,000.
conventional loans vs FHA loan Conventional loans give the borrower more flexibility when it comes to loan amounts while an FHA loan caps out at $314,827 for a single family unit in lower cost areas, $726,525 in high cost areas. Conventional loans often do not come with the amount of provisions that FHA loans do.
Some options include: FHA loans, which require just 3.5% down; VA and USDA loans, which require zero down in some cases; and.
the FHA also offers an appealing alternative to conventional loans as interest rates begin to rise. FHA loans typically require a lower down payment (as low as 3.5 percent), and many lenders allow for.