Skip to main content
_FB_2018-Icons-finalized-cleaned-up_new_FB_2018-Icons-finalized-cleaned-up_newGroup 9
Back
Scroll to top

Conventional Mortgage Loans

Homebuying 3 min read

Ready to talk to an expert?

Applying for a home loan can be a strenuous process, especially if you’re unsure which type of loan is the best fit for your financial situation. Before you apply, it is important to understand the two types of loans available to you: conventional mortgage loans and a government-backed loans. In this article, we’ll break down the basics of conventional loans.

What are Conventional Mortgages?

Conventional loans can have fixed or variable interest rates, which can be impacted by your credit score. Qualifications for conventional loans are usually stricter than government-backed loans because they carry a higher risk for banks and private lenders. If the borrower defaults on the loan, the banks and private lenders are not protected.

These kinds of loans are not insured by the federal government, but they are still required to follow guidelines set by the Federal National Mortgage Association—a.k.a. Fannie Mae and Freddie Mac.

A Conventional Loan to Meet Your Needs

If you live in North Carolina or South Carolina and are looking for a flexible and affordable conventional loan,* look no further than your local First Bank. We offer both adjustable-rate and fixed-rate mortgages with a range of features and benefits that are sure to fit your specific financial needs.

Conventional Adjustable-Rate Mortgages

This kind of mortgage loan changes periodically depending on shifts in the corresponding financial index associated with the loan.

  • ARMs generally have a lower initial interest rate than fixed-rate mortgages.
  • Both your interest rate and your P&I (monthly principal and interest) payments will stay the same for an initial period of 3, 5 or 7 years. After that it will adjust periodically.
  • Interest rate caps set a limit on how high your interest rate can go for your P&I payment for each adjustment and over the life of the loan.
  • Loans are available for 30-year amortization schedules.

Conventional Fixed-Rate Mortgages

  • Your interest rate and P&I payments stay the same for the life of your loan. That predictability for your monthly P&I payments enables you to budget more easily.
  • This kind of loan is available in a variety of loan term options, and it protects you from rising interest rates no matter how high they fluctuate.
  • This option is good for individuals or families who plan on staying in the same home for a long time.

No matter which kind of conventional loan you’re interested in, we’re confident that our knowledgeable loan officers will be able to find the best fit for you. Contact us for a free personal mortgage consultation with one of our experts.


*Loans subject to credit approval.

———
Sources:
http://budgeting.thenest.com/conventional-mortgage-loan-mean-4051.html
http://homeguides.sfgate.com/conventional-mortgage-loan-1991.html
http://www.investopedia.com/terms/c/conventionalmortgage.asp
http://www.zillow.com/mortgage-learning/fha-vs-conventional-loans/
https://localfirstbank.com/mortgage/loans-programs/conventional-loans/
http://www.investopedia.com/terms/a/amortization.asp

Find a Loan Officer


Ready to talk to an expert?

Share:
First Bank’s Good To Know Logo
Sign up for our newsletter and be the first to know about new tips, insights, and products from First Bank.
First Bank may use this email address to contact you about products, services, and promotions.

You may be interested in...

Essential Homeowner’s Insurance Life has the ability to catch us off-guard with unanticipated and costly expenses, such as house damage from a fallen tree or basement pipes bursting during the winter season. That’s why homeowner’s insurance is essential for anyone interested in purchasing a home. Purchasing a home is a major life event, so you want to make sure your investment is protected and insured. So, how does homeowner’s insurance work? You pay an annual premium and choose a deductible amount to be paid when you file an insurance claim. That premium is generally paid on a monthly basis as a part of your mortgage. If an event that’s covered by your policy damages your home, such as a fallen tree or fire, you should immediately contact your insurance company to file a claim. The company sends an adjuster to assess all of the damage once your claim is filed. Based on his or her notes, your insurance company will offer a sum of money for repairs, then settle the claim. The amount may be negotiable if you feel it’s not substantial enough to cover the cost of repairing or rebuilding your home. Keep in mind, however, that filing more than 2-3 claims, especially for minor losses, can backfire and lead to an increase in your annual premium. What Kind of Coverage Does Homeowner’s Insurance Include? Without home insurance, it’s likely that you wouldn’t be able to afford the cost of home repairs or rebuilding. With the average cost of a claim coming in at approximately $7,500, even filing one claim in the entire span of your insurance policy can make it worth the protection. Here are some common claims homeowners file: Interior damage—Any accidental damage to your house’s interior is covered by home insurance, including water damage, theft, fire, paint peel, and glass breakage. Exterior damage—A large portion of claims are made up of exterior insurance claims, particularly to repair damage resulting from storms. This kind of claim is particularly applicable to homeowners in wooded or coastal areas who have a higher risk of damage from lightning, wind, or falling debris. Total destruction—While this kind of claim is less common than others, it’s the “most common insurance” offered. The average home value 3 min read
10-Step Program for First-Time Homebuyers If you’re searching for a first-time homebuyer program, it’s important to find a process that is simple and clear. Purchasing a home for the first time is a significant event, so it’s also a process that requires you to be well-informed and careful. In an article by award-winning writer Gina Roberts-Grey, she outlined the top 10 steps all first-time home buyers must consider before taking the plunge: “Review your financial health”—Before you dive into listings and open houses, it’s vital that you evaluate your financial situation. This ranges from your savings to your bills to your 401k; you need to be sure you can afford the expense. “Check into benefits for first-time home buyers”—You can discover options, including tax benefits, that can make the property more affordable. Look into what deals you can find as a first-time homebuyer. “Meet with lenders”—Meet with lenders and present your financial and benefit findings. A lender will assess your credit score and the amount you can qualify for on a loan and will discuss your assets (savings, 401(k), etc.) and debt, as well as any local programs that might be available for down payment assistance. “Shop around for a mortgage”—As you’re searching for pre-approval, don’t take the first offer. Spend time looking at what different lenders can offer. And keep in mind that “pre-approved” and “pre-qualified” are two different things. “Have a backup lender”—Many factors can affect whether or not your mortgage application is approved, including market changes and shifting guidelines. A backup lender that qualified you for a mortgage loan can give you an alternate way to keep the process on, or close to, schedule. Find a realtor—If you’ve reached this step, congratulations. This means you’re ready to find a real estate agent. When you’re looking for a realtor, it’s best to look for one who works with a team of people who can offer suggestions about home inspectors, insurance agents, etc. Decide on a neighborhood—Narrow your search area to help give you a better idea of what you want and can afford. Two primary factors to consider are neighborhood taxes and length of commute to work. When you find a property, crunch your numbers again—At this step, you’ve found your dream home 4 min read
How to Get a Mortgage for a Rental Property Looking for rental property mortgage rates near you? If so, First Bank can provide you with tips and tricks on how to get a rental property mortgage, as well as how to find the best mortgage rates near you. Rental Property Tips: How to Get a Mortgage According to Money Under 30: “Getting a mortgage for an investment property can be headache. Your best bet is to be prepared before you even start down that path. Make sure you have enough cash reserves to make your lender happy, as well an impressive credit score.” How Can You Prepare? Know the lending limits — For example, Fannie Mae currently allows each investor to carry 10 loans at once. Look for investor-friendly lenders — Having a good relationship with your lender could be the key to success. Know your credit requirements — There are two different credit-qualification guidelines for getting rental property loans. Prepare your cash reserves — Lenders typically require you to have six months of cash reserves available per property. Be prepared to make a down payment — There are sets of guidelines regarding rental properties that you must follow when making a down payments. Show your W-2 income — Lenders typically require that you show a minimum of two solid years of W-2 income. Traditional Mortgage vs. Rental Property Mortgage If you are looking for a rental property mortgage, expect to find rates that are slightly higher than primary residence mortgages. Lenders are trusting that you will be able to rent the property to tenants and that they will be able to make their payments on time to you. Don’t be surprised to see mortgage rates for rental properties fluctuate more than primary residence mortgage rates from one lender to the next. Some lenders are more trusting in rental properties than others and may want to see that you have enough money to pay for both your primary residence mortgage and the rental property mortgage at the same time. This is a safety net for the bank in case your rental property fails to attract any renters or those renters fail to pay the rent. Mortgage rates can vary from one lender to the next but there are also some key differences in the mortgage itself when compared to 3 min read