A conventional home loan mortgage is a particular type of mortgage that differs from loans such as Federal Housing Administration (FHA) and the Department of Veterans Affairs (VA) mortgages. The primary difference from these other loan types is that with a conventional loan, the loan is not backed, or insured by the Federal Government. Conventional loans may be either conforming or non-conforming. Conforming conventional mortgages follow guidelines including loan limits that are set by Freddie Mac and Fannie Mae. Portfolio conventional mortgages are loans that a mortgage lender will keep “on their books”, and the lender can set their own guidelines. While the conventional home loan program offers many benefits, it may not be for everyone. It is important to speak with a mortgage professional to assist you in determining what works best for your unique situation.
There are a number of benefits offered by conventional home loans. This is especially true as the country continues to emerge from the banking crisis experienced in 2007-2008. Most conventional loans have fixed interest rates that are locked, meaning your payment and rate will remain the same for the life of the loan term. This protects you from increased rates over time. Should the rates fall, you are able to consider refinancing as well. Also, because conventional loans are not federally-backed, they often will provide more flexibility. You can work with the lender who is providing the loan to better fit your needs. Also, loan terms are often better with a conventional home loan, and private mortgage insurance may not be required. Conventional loans may also allow you to borrow a percentage of your home’s value above the cost of the home for other needs such as home improvement projects. In the end, the benefits all depend on your situation, and the particular lender or loan package. However, if you qualify, it may be your best option.
There are some considerations that must be made when choosing a mortgage type. Conventional loans may offer great benefits, but they may also carry requirements set by the lender. With a conventional loan, it is the lender, not the government who takes on the risk should you ever default on your mortgage. Because of this, the lender may have requirements and qualifications set to reduce that risk. If you have a lower credit score or a recent bankruptcy, you may have difficulty qualifying for a conventional home loan. It is because of this that you must consider each mortgage package and each lender individually to ensure it is a good fit. This can be confusing, but with the help of a professional mortgage company, you can be sure they will assist you in finding the right loan for you and your family.
Equity Source Mortgage knows the mortgage and refinancing market and has been serving home buyers since 2000. Because of this experience and understanding, Equity Source Mortgage is uniquely equipped to provide vast information and great counsel to find the right home mortgage and loan options. We understand the importance of your home, and the importance of a mortgage that is right for your unique situation. We are passionate about providing you the straight talk to make sure you are aware of your options, and we work hard to help you make the right decision. Contact Equity Source Mortgage today, or inquire online through our secure online pre-qualify now application.