Conventional Loan Explained

With a multitude of options for mortgage loans a conventional loan is prevalent and highly utilized in the home buying industry. Here are a couple of reasons why a conventional loan might be the perfect loan for you. For starters to qualify for this loan you typically must have a higher credit score, most places will look for a score of 620 and above. Remember the higher the credit score the high the chance of being approved for any loan. Another characteristic that would help you qualify for this conventional loan would be a lower debt to income ratio. In laments terms, the lender who is giving you the loan wants to make sure you can afford the monthly mortgage payment on the property in question.

This plays into the next thing the lender will want you to provide and that is a stable income. Here at Better Lending, we want to make sure you are in a good situation financially, the stable income will show that the amount you are bringing in every month will be suitable to make timely payments on the loan. Lastly to qualify you will need to be able to make a down payment of at least 3% or more. The higher the down payment the lower the loan will be. If you choose to put down 20% you can avoid private mortgage insurance (PMI). With that said there are a lot of other advantages that come along once you get approved. A conventional loan not only can be used for a primary but also a secondary residence loan. To many people, those are great advantages but the one that seems to attract the most attention would be the topic of interest rates. Typically, Conventional loan interest rates are better than comparable government-backed loans but that’s not all! Both fixed-rate and adjustable-rate terms are available for the life of the loan.

Lastly, the loan can be used to refinance an existing loan or a new home purchase. If this doesn’t quite fit your needs, you can also look into a Conventional conforming loan. This loan usually Is at or under the maximum county loan limit of the property. These are called conforming because they adhere to the guidelines set forth by Fannie Mae and Freddie Mac. To Check out other loans available click on loan options at the top of this blog to get pre-approved today. Check back next week to read about what process follows after being pre-approved!