What’s a traditional refinance?

A low-cost conventional loan that may lower your monthly payment or let you pay off your house sooner.

If you want to make your mortgage payments more comfortable and your home value is steady or has increased, you may be able to refinance your mortgage with a traditional refinance loan. Traditional loans are backed by Fannie Mae or Freddie Mac, and they are generally the lowest-cost refinance loans.

You may be able to get a traditional refinance home loan from U.S. Bank even if your current mortgage is with another lender.

Benefits of a traditional refinance

Lower your monthly payment

Refinancing into a lower interest rate could reduce your payment, leaving more money in your monthly budget. Traditional refinancing is also available with adjustable rates for even lower payments during the initial rate period than comparable fixed-rate loans.

Change the term of your loan

If your current mortgage is a 30-year loan, you could shorten your loan term with the goal of building equity faster or paying off your home more quickly. U.S. Bank offers traditional refinancing loans with terms of 10, 15 and 20 years, as well as the 30-year option.

Pay less in costs and fees

Conventional refinance loans may cost less than FHA and VA loans, which typically have higher closing costs and monthly fees.

Requirements and qualifications

  • Credit history – Because conventional refinance loans are not backed by the government, you may need a higher credit score and more equity in your home to qualify. (If you don’t meet these criteria, U.S. Bank also offers FHA and VA refinance loans with less restrictive requirements.)
  • Home equity – If you have less than 20 percent equity in your home, you’ll probably have to pay for private mortgage insurance – but even then, your total monthly payments are likely to be lower than with some of the costs associated with other loan types, such as the FHA monthly fee.
  • Market value – To qualify for a traditional refinance, your home’s current market value must be higher than your current home loan balance.

Ready to get started? Our mortgage loan officers can answer all of your home refinance questions and help you find the mortgage that's right for you.