Is a Conventional Mortgage Good For You
- Conventional Loans and the homeownership process! -
PMI not available
* Minimum down payment for this conventional loan is .
** PMI IS ESTIMATED.
The mortgage enviroment is continually changing, and
PMI rates are dependent upon many factors, including
credit scores, loan to value, debt to income, and more.
PMI Rates are not available on loans with less than 5% down payments.
The staff at Citywide Housing Services, prides itself on being an important source for Landlords, Tenants, Buyers and Sellers to find real estate solutions online.
What Is a Conventional Loan
In today's market place a conventional mortgage seems like the best deal for homebuyers. Of course, this requires a larger downpayment and more strict rules and regulations. Conventional loans are not insured or backed by the government, such as FHA or VA Loans, which means if the borrower defaults the lender suffers all the losses. To protect themselves, lenders require downpayments in the range of 5% - 20% and tougher credit guidelines. Downpayments of less than 20% normally require the borrower to pay for Private Mortgage Insurance (PMI), which is calculated monthly and added to the mortgage payment. The Recovery and Housing Act of 1998 still requires all PMI payments to cease once the borrower pays down 20% of the property value. With the recovery of the housing market, we are seeing some lenders reducing the downpayment requirements and moving away from PMI payments. For many borrowers with good credit, high incomes and more savings for a downpayment, a conventional mortgage is a much better option than a government backed mortgage.
Benefits of a Conventional Loan
If you have good credit, the required income and downpayment requirements, conventional loans are a better deal than government back loans. You will also enjoy better interest rates and the property is not required to meet the guidelines required of government backed loans such as price, appraisal, and habitability. For example, a buyer once complained to our office that his FHA mortgage was denied because the appraiser concluded the steps wasn't the correct height. Needless to say the seller had no intention to build new steps and sold the property to a conventional buyer only a few weeks later.
Drawbacks of a Conventional Loan
Conventional loans are difficult for borrowers who lack the the required downpayment and perfect credit. For example, you can secure a FHA Loan with 3.5% down and no downpayment with a VA loan, while most conventional lenders require a minimal downpayment of 5% - 20%.
Starting The Loan Process
The first step in starting the process is to use the conventional mortgage calculator on this page to do the math and at least get an approximate range of what to expect in payments if you use a Conventional Mortgage to purchase your home. Next, contact a reputable lender to help you understand the loan process. The lender will also provide you with valuable information about your credit, possible loan size, or issue a pre-approval. A pre-approval assures a realtor and seller a lending institution has qualified you to buy a home. A pre-approval letter is needed before starting a search.
The decision to apply for a Conventional mortgage starts with you. Any questions about the loan process or to find a home using the conventional mortgage product can be forwarded to 914-299-0420.