Conventional Loans

A conventional loan is one that is not formally backed by any government entity such as FHA, VA, and USDA. Rather, it is a loan that follows guidelines set by Fannie Mac and Freddie Mae, two agencies that help standardize mortgage lending in the U.S.

If you are looking to Purchase a Home or Refinance your current loan, a Conventional Mortgage is a great choice with the Lowest available Rates.

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While a conventional mortgage appeals to a wide demographic, it’s especially good for first-time borrowers with decent credit and some amount of down payment.

Low down payment conventional loans

Conventional Loans are available with a Down Payment of as little as 3% with the HomeReady Loans and Conventioanl 97 Loans.

Low Down Payment options are extremely popular with Home Buyers as it does not tie up all of your money when purchasing a Home and many Buyers like the fact that they may have more funds for other expenses.

What is a conventional loan?

Conventional loans are growing in popularity thanks to low rates and increasingly flexible guidelines.

A conventional loan is one that is not formally backed by any government entity such as FHA, VA, and USDA. Rather, it is a loan that follows guidelines set by Fannie Mac and Freddie Mae, two agencies that help standardize mortgage lending in the U.S.

Conventional loans are also known as conforming loans because they “conform” to Fannie Mae and Freddie Mac standards.

Does the lack of government backing make conventional loans less desirable? Hardly.

While a conventional mortgage appeals to a wide demographic, it’s especially good for first-time borrowers with decent credit and some amount of down payment.

What are conventional mortgage advantages?

Like most loans, you have an option about how long you will be paying your mortgage.

Conventional loans come in 15, 20, 25, and thirty-year terms. Some lenders even offer 10-year conventional loans.

The shorter your loan term, the higher your monthly payment. Fortunately, a loan term of 30 years still comes with low fixed interest payments that help home buyers budget and cover the other costs of home ownership.

Conventional loans are also a smart choice for those who know they won’t remain in their house long and want a shorter-term, adjustable-rate mortgage. This option comes with a lower interest rate than that of a fixed-rate loan.

Adjustable rates are in fact fixed, but only for a period of time – usually 3, 5 or 7 years. During that initial “teaser” period, the homeowner pays ultra-low interest and can save thousands.

The glitch here is that if they don’t sell at the end of the loan’s life, the rate adjusts — maybe down, but also maybe up. It’s a gamble that they should discuss with their lender and financial advisor.

Another advantage to conventional loans is the lack of an upfront mortgage insurance fee, even if the buyer puts less than 20 percent down.

With Barbara Kenton at Allianz Mortgage Service, we know all about Conventional Loans and how to qualify you for either a Home Purchase or Refinance.   If you are located in the Los Angeles, Orange County, San Bernardino, Riverside County area,  or anywhere in California, contact us today to get started.

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