Once again, Coldwell Banker Mortgage Advisor Steve Nimmer NMLS # 186680 ph. # 912-604-3834 comes through with a great article to share.
Useful information you need to make an educated decision. And if you live in the Savannnah, GA MSA and are ready to buy give me a call 912-352-1222.
Conventional Loans
Conventional loans are the most traditional type of financing for a home purchase or refinance. Conventional loans are underwritten by government-backed enterprises, including Fannie Mae and Freddie Mac, and have their own set of guidelines (see Eligibility below).1
Benefits
Individuals with good credit, a steady income and who can afford the down payment on a conventional loan can take advantage of a number of benefits:
Eligibility
Borrowers must meet several criteria for conventional loans including demonstrating stable employment and having a maximum debt-to-income ratio of less than 33/45 (a borrower's mortgage payment cannot exceed 33% of their gross monthly income and total debt/obligations cannot exceed 45% of their gross monthly income). They also need good to excellent credit, specifically, FICO scores of 620 or above. Larger down payments are also required for conventional loans between 5%-20% of the home's sale price for the down payment plus additional cash/savings for closing costs.2
Mortgage Types
Fixed Rate Mortgages: A fixed rate mortgage is an option for conservative borrowers, those who want to lock in near historically low rates and homeowners who plan to stay in the home for a long time. With a fixed rate mortgage, interest rates remain static, and the borrowers' principal and interest payment will remain the same for the term of the loan.3 Fixed rate loan terms are generally amortized over 30, 20, or 15 years.
Adjustable Rate Mortgages: Conventional adjustable rate mortgages (ARMs) can be beneficial for borrowers who don't plan to live in the home for a long period of time, or when mortgage interest rates are high or increasing. ARMs begin with lower initial interest rates and monthly payments; however, after an initial fixed period, the interest rate will adjust. (Most ARM rates are tied to the performance of one of three major financial indexes.)3 This type of mortgage is often considered by borrowers ARMs typically offer initial fixed-interest periods of 3, 5, 7, or 10 years.
Sources:
1.Conventional Loan vs. FHA Loan by Karina Carrillo Hernandez
2.Conventional Home Loans Explained by Daniel Duffield
3.Adjustable-rate Mortgages by Realtor.com
A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga
Useful information you need to make an educated decision. And if you live in the Savannnah, GA MSA and are ready to buy give me a call 912-352-1222.
Conventional Loans
Conventional loans are the most traditional type of financing for a home purchase or refinance. Conventional loans are underwritten by government-backed enterprises, including Fannie Mae and Freddie Mac, and have their own set of guidelines (see Eligibility below).1
Benefits
Individuals with good credit, a steady income and who can afford the down payment on a conventional loan can take advantage of a number of benefits:
- competitive interest rates, typically lower than FHA, VA and jumbo loans,
- faster mortgage processing in most cases,
- avoiding private mortgage insurance if the borrower puts 20% down,
- building equity faster.
Eligibility
Borrowers must meet several criteria for conventional loans including demonstrating stable employment and having a maximum debt-to-income ratio of less than 33/45 (a borrower's mortgage payment cannot exceed 33% of their gross monthly income and total debt/obligations cannot exceed 45% of their gross monthly income). They also need good to excellent credit, specifically, FICO scores of 620 or above. Larger down payments are also required for conventional loans between 5%-20% of the home's sale price for the down payment plus additional cash/savings for closing costs.2
Mortgage Types
Fixed Rate Mortgages: A fixed rate mortgage is an option for conservative borrowers, those who want to lock in near historically low rates and homeowners who plan to stay in the home for a long time. With a fixed rate mortgage, interest rates remain static, and the borrowers' principal and interest payment will remain the same for the term of the loan.3 Fixed rate loan terms are generally amortized over 30, 20, or 15 years.
Adjustable Rate Mortgages: Conventional adjustable rate mortgages (ARMs) can be beneficial for borrowers who don't plan to live in the home for a long period of time, or when mortgage interest rates are high or increasing. ARMs begin with lower initial interest rates and monthly payments; however, after an initial fixed period, the interest rate will adjust. (Most ARM rates are tied to the performance of one of three major financial indexes.)3 This type of mortgage is often considered by borrowers ARMs typically offer initial fixed-interest periods of 3, 5, 7, or 10 years.
Sources:
1.Conventional Loan vs. FHA Loan by Karina Carrillo Hernandez
2.Conventional Home Loans Explained by Daniel Duffield
3.Adjustable-rate Mortgages by Realtor.com
A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga
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