Typically Requires Down Payments Of At Least 3%.
Unlike FHA, VA, and USDA Loans, conventional loans are not insured by the government. Conventional loans are ideal for borrowers with good credit rating and stable income. They give buyers the widest variety of options and are the most popular loans for purchasing a new home or refinancing an existing property.
Conventional loans do have low down payment options, contrary to popular belief. Borrowers can utilize gift funds as part of the down payment with this program.
Conventional loans enable borrowers to choose between the following options:
Length of the loan. With conventional loans, homebuyers can choose from 15 to 30-year terms
Size of the down payment
Nature of the loan (whether it is a fixed-rate mortgage or an adjustable-rate mortgage).
In order to choose the right conventional mortgage, you need to determine how long you intend to own the home.
For instance, with a fixed-rate mortgage, you’ll know what your rate will be for the period of your loan. This is great if you plan to own the property for a long period of time. With this option, there’s no risk of your rate increasing irrespective of the market rates.
On the other hand, adjustable-rate mortgages are ideal if you plan to stay in your home for a short period of time. However, it exposes you to the risk of your rate rising thereby increasing your monthly payments. Although even with an adjustable-rate, there is a period of time, normally 5-7 years, that the rate is fixed making it ideal for those short-term living situations.
Selecting the right conventional loan can be a daunting task. Mortgage Specialists will guide you through the entire process in order to pick the right conventional loan for your residential home loan needs.
Contact us to learn more.