Homebuyers have lots of mortgage options to choose from – most of which fall under conventional home loans. As one of the most common home loan options available, most lenders offer such conventional mortgage to their borrowers.
If you’re thinking about buying a house in the near future, then don’t forget to consider a conventional mortgage loan.
Here are seven essential points you need to know about Conventional Loans Grand Prairie.
A Conventional Mortgage application is not that hard to qualify for.
Contrary to popular beliefs, average home buyers can enjoy such mortgage type. All you need is a good credit score of at least 620, a good credit report, financial documents that prove you have enough cash for the down payment, and good LTV and DTI ratios.
It Can Either Be A Conforming Loan Or A Non-Conforming Loan.
Conforming Loans are conventional mortgages that follow the guidelines set by Freddie Mac, Fannie Mae or Ginnie Mae. Non-Conforming Loans, on the other hand, private lenders funds the mortgage and sets the loan guidelines.
It Can Be A Fixed-Rate Loan Or An Adjustable-Rate Loan.
If your conventional mortgage is a fixed-rate loan, the interest rates, and monthly mortgages fees stay the same for the duration of the loan. Adjustable-Rate Conventional mortgages have a note that adjusts periodically depending on the set index.
Different Conventional Mortgage Programs Requires Different Down-Payment.
It is always a better idea to pay at least 20% down payment for you to dodge PMI charges. However, other conventional loan types allow down payments lower than 20%. Some lenders will even approve down payment gifts. Mortgage applicants can have a portion of their down payment as a gift from friends and family provided you can provide proof that they won’t be asking for repayment in the future.
Loan Limits Varies From One State To Another.
The maximum conforming loan limit you can get stands at $484,350. If you plan on buying a house on areas considered higher-priced location, the loan limit can go higher. Make sure to double check the specific loan limit for wherever location your home purchase will be.
You Get To Save More By Choosing A 15-Year Fixed-Rate Mortgage.
While the shorter the loan term is, the bigger the monthly fees will be, you get to acquire home ownership faster. This will also save you more money in interest compared to a conventional loan with a repayment period of 30 years.
PMI Charges Automatically Stops After You Pay 80% Loan-To-Value Ratio.
If you choose to pay lower than 20% down payment, then expect to have to pay for Private Mortgage Insurance. The good news is, you lender will terminate PMI fees once you reach 80% LTV. Some will even consider it when you’re able to repay them 78% LTV.
Like other loan types, it has its perks and drawbacks. Consider at least three mortgage options and shop for mortgage lenders before making a final choice. With mortgage being a long-term commitment, it’s best to explore your options and think it through before saying yes to your mortgage option of choice.