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Conventional Mortgage Loans
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.
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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