When the time comes to make a home purchase, you’ll quickly discover that Fairway of the Carolinas offers myriad home loan programs. This doesn’t mean they’re all right for you, however. One of the best places to start is with a conventional loan. Even if another loan program proves to a better fit for you, conventional loans are perfect for a significant number of homebuyers. But why? Up next are some things to know about conventional loans.
What are Conventional Loans?
First off, a conventional loan is a loan not created by a government entity. This kind of loan, also known as a conforming conventional loan, simply “conforms” to the guidelines put in place by Fannie Mae and Freddie Mac. Secondly, a conventional loan involves borrowing no more than $548,250. If you wish to borrow this amount or less, there’s a strong possibility that a conforming conventional loan will be your best bet. But, of course, your Fairway of the Carolinas mortgage adviser can help you make a more informed decision.
What are The Benefits and Requirements of Conventional Loans?
Let’s start with the benefits! Unlike some loans, which require a down payment of as much as 20%, some conventional loans require a down payment of as little as 3%. Conventional loans also offer the flexibility of fixed or adjustable interest rates. With the former, monthly payments remain unchanged for the period of the loan – typically 15 or 30 years. With the latter, your monthly mortgage payments may fluctuate depending on certain factors. Another perk to conventional loans pertains to Private Mortgage Insurance (PMI). Once your principal loan balance dwindles to 78% of the home’s value, you can cancel your PMI. By contrast, PMI on FHA loans may last the entire lifespan of the loan.
As for the requirements to land a conventional loan, there aren’t many. Generally, you’ll just need a credit score of 620 or higher and the ability to make a down payment of least 3%. Conventional loans aren’t limited to those who have a certain income or live in a particular area. The best thing to do is check with our team of mortgage advisers about the requirements, if you have any questions. A credit score under 620 also isn’t a kiss of death. Fairway’s internal Creditool team can help you easily raise your score to where it needs to be for a conventional loan.
While conventional loans aren’t going to be the best option for homebuyers such as military veterans (who are likely VA loan-eligible), there’s an excellent chance this kind of loan is right for you. Contact us today at Fairway of the Carolinas. Our team will help you navigate to the loan that will put on the quickest path to your dream home.