Conventional Loans are flexible mortgage loans that can be attained from any lender, such as a bank or a mortgage company with a fixed rate or an adjustable rate since they are not insured or guaranteed by any government agency, such as the Federal Housing Administration (FHA), the Farmers Home Administration (FmHA), and the Department of Veterans Affair (VA). Since they aren’t backed up by any government agency, this type of loan has its own fixed terms and rates.
A Conventional Loan is a type of a mortgage loan that’s not guaranteed, insured, and backed up by any federal or any government agencies such as the Federal Housing Administration (FHA), the Farmers Home Administrations (FmHA), and the Department of Veterans Affair (VA). Thought conventional loan can be obtained by any lender such as a bank or any mortgage company as it has its own fixed terms and rates and does follow Fannie Mae and Freddie Mac guidelines. Conventional loans might have either a fixed rate mortgage or an adjustable rate mortgage (ARM) depending on what you and your loan officer agreed on. Nowadays Conventional Mortgages do have a higher down payment and credit score requirements then the government loans. If the loan-to-value (LTV) exceeds eighty percent (80%) on a conventional loan, then private mortgage insurance is required by the mortgage lender. However conventional loans do provide more flexibility due to great rates and low costs. When borrowing conventional loans from a bank, do know the fact banks can set their own risks and guidelines. Conforming Loan is considered as a conventional loan but has a minimum credit score of 620 and high mortgage rate requirements yet still tend to have a maximum loan-to-value (LTV) ratio of ninety-seven percent (97 %) whereas a non-conforming conventional loan may require low credit scores and a high loan-to-value (LTV) ratio. The maximum limit for a conforming loan depends on the county and state you live in which can be found here atFannie Mae website.
To acquire a conventional loan, you must have the basic qualifications of an eligible income and good credit with an intent of purchasing a home or simply lowering the rate or term of your existing home. Conventional Financing will allow you to borrow up to eighty-five percent (85%) of your home’s value if you ever need to take cash out for any reason. If you’d like to apply for a pre-approval of a loan which can help you determine what you can afford to borrow, you can also simply apply for a loan after you find a property you’re interested in buying, although it’s not guaranteed the fact you’ll be approved for the pre-approval of a loan, we highly recommend scheduling an appointment with us at no cost consultation for specific guidelines.
As of 2016, these specific requirements guideline will help you acquire a conventional loan:
A conventional loan requires as little as three percent (3%) down for a fixed rate term or ten-percent (10%) down for an adjustable rate term. Since December 2014, Fannie Mae and Freddie Mac opt out a new program that requires smaller down payments. Best part about Conventional Mortgage Insurance is that you can cancel it out anytime you would like.
Anytime you put less than twenty-percent (20%) down in a conventional loan, a Private Mortgage Insurance is required. Although Private Mortgage Insurance is much similar to an auto insurance, it’s a risk-based insurance which means you will have low premiums if you have a good credit history and the best part for those with a good credit is the fact that private mortgage on a conventional loan can cost less than Federal Housing Administration (FHA)’s mortgage insurance. So basically, when you have a good credit, you will have benefits.
As with most other loan types, you’ll need to provide the following documentation to prove your income and assets:
The following properties are qualified for conventional financing:
Simply fill out this form to see if you qualify and we will contact you soon as possible to help you with your mortgage and/or refinancing needs.
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