Do you know how the mortgage loan process works? We want you to be educated on the process so you fully understand step by step how we are going to get you in the home of your dreams. We have a unique tool built specifically to help you understand the mortgage loan process from start to finish!
Conventional loans are usually home loans that are not guaranteed, nor insured with the help of the federal government. This means the actual details of the loan can be a lot different than what you might hear about them.
For example, loans that adhere to requirements set out by Fannie Mae and Freddie Mac usually ask for a down payment of 3%. The Federal Housing Administration also has pretty relaxed standards that can make it possible to have a down payment of 3.5%.
Loan programs backed by the federal government, aside from those through the Federal Housing Administration, include VA loans and USDA loans. VA loans are available for active military personnel and veterans, while USDA loans are targeted towards those who are buying rural property since they are backed by the Department of Agriculture.
On the other hand, conventional loans are seen as riskier because there is no one to guarantee them, but they can be more manageable for people to take on because insurance premiums can be lower than their government counterparts.
The typical profile of a person who takes on a conventional loan is often one who is financially secure, less likely to default, and prepared to put down a larger down payment.With such a high risk,conventional loans might come with a big down payment that could total up to 20% of the loan. However, some programs are offered where people can pay less to try to make the loan competitive with government offerings from the Federal Housing Administration.
Additionally, requirements for a down payment can vary based on a person’s credit score and the concerns by the lender. Borrowers who take on a conventional loan are usually responsible for a number of other fees, including origination and appraisal fees. Most people also take on mortgage insurance, which means these types of conventional loans come with a high out-of-pocket cost.
Conventional loans fall into two categories: conforming and nonconforming.
Conforming loans follow the Freddie Mac and Fannie Mac guidelines. The biggest rule makes the loan limit different depending on the area.
Non-conforming loans are designed for people who are not able to qualify for a conforming one. These usually come into play when the loan amount is higher than the conforming limit.
Nonconforming loans also come in a variety of types for different situations. They can be tailored towards people with poor credit, high debt, or made for those who recently went through bankruptcy.
Contact Insight Team today to get the help you need in getting a conventional loan!
Insight Team can help you compare the different types of conventional loans to make sure you are getting the product that suits your situation, while navigating you through any fees or other requirements. Generally, borrowers who have strong credit and can pay a big down payment are suitable for a conventional loan.
After getting your conventional loan and purchasing your home, you may think that everything is up to you to manage. But with Insight Team, you will continue to be supported and educated on how to manage your mortgage. The Art of Homeownership is a home ownership program that will guide you after your already have your home. We offer this so you have expert guidance at all times, always have a perfect mortgage experience and proactively maintain your home, which increases your home value over time! Contact Insight Team today to learn more about mastering “The Art of Homeownership”.