Refinancing Into a Conventional Loan in Pennsylvania: Is It Worth It?

Conventional Loan

Refinancing Into a Conventional Loan in Pennsylvania: Is It Worth It?

Reviewed by the HomeMath editorial team Updated 2026-08-06

Key takeaways

You’ll typically need at least 20 % equity to avoid private‑mortgage insurance.
Closing costs generally range from 2 % to 5 % of the loan amount.
A break‑even point is often reached after 2–5 years of lower monthly payments.
Pennsylvania closings are usually handled by an attorney, which can add a few hundred dollars to costs.

Refinancing into a conventional loan can be a smart move if you have built equity, your credit has improved, or you want to eliminate mortgage insurance. Conventional loans are not backed by the federal government, so they follow stricter underwriting guidelines but often offer lower rates and more flexibility than government‑backed options.

How a Conventional Refinance Works

You apply for a new loan that pays off your existing mortgage. The new loan can be for the same amount (a rate‑and‑term refinance) or a larger amount if you want cash out. Because the loan is conventional, the lender will look at your credit score, debt‑to‑income ratio, and the loan‑to‑value (LTV) ratio.

Key Pennsylvania Considerations

Attorney‑handled closings: Most Pennsylvania counties require a real‑estate attorney to oversee the closing, which can affect timing and add attorney fees to the overall cost.
First‑time‑buyer assistance: The Pennsylvania Housing Finance Agency offers programs that can provide down‑payment or closing‑cost assistance, but these benefits typically apply to original purchases, not refinances. However, having participated in a program can improve your credit profile.

Cost vs. Savings

The biggest expense in a refinance is the closing cost, usually 2 %–5 % of the loan amount. These include appraisal fees, title searches, attorney fees, and recording fees. To determine if it’s worth it, compare the new monthly payment (including any escrow) to your current payment and calculate the break‑even point. Most homeowners see a break‑even after 2–5 years, depending on how much they save each month.

When It Makes Sense

You have at least 20 % equity and can avoid private‑mortgage insurance (PMI).
Your credit score has risen, qualifying you for a lower interest rate.
You can lock in a fixed rate after a period of variable‑rate payments.
You want to consolidate high‑interest debt into a single, lower‑rate mortgage.

Remember, every refinance situation is unique. Use a mortgage calculator, gather several lender quotes, and factor in Pennsylvania‑specific costs before deciding.

This is general information and not personalized financial advice.

FAQ

Can I refinance with a conventional loan if my credit score has improved since I bought the home?

Yes. Conventional lenders typically require a credit score of 620 or higher, but a higher score (e.g., 700+) can qualify you for better rates. Your improved credit can make a refinance more attractive even if you previously used a government‑backed loan.

Do I still have to pay private‑mortgage insurance (PMI) after refinancing?

If your new loan‑to‑value ratio is 80 % or lower, you can eliminate PMI. If the LTV is higher, most conventional lenders will require PMI until the balance drops below the 80 % threshold.

How does Pennsylvania’s first‑time‑homebuyer program affect a refinance?

The state’s first‑time‑homebuyer assistance programs are designed for original purchases, not refinances. However, participating in such a program can improve your credit and equity position, which may help you qualify for better conventional refinance terms.

What role does an attorney play in a Pennsylvania refinance closing?

In Pennsylvania, a real‑estate attorney typically conducts the title search, prepares the deed, reviews the loan documents, and ensures the transaction complies with state law. Their fees are part of the closing costs and can add a few hundred dollars to the overall expense.

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