Conventional Financing for Purchase or Refinance
What is a Conventional Financing for Purchase or Refinance Loan
Conventional mortgages are non-government guaranteed loans, they are typically sold on the secondary market to Fannie Mae and Freddie Mac. In other words these are your plain vanilla loans for people with good credit history and money 20% equity or down payment. Rates for these loans are usually higher than Government loans but the overall payments and costs are normally lower because of they do not require funding fees or mortgage insurance.
There are programs available now to allow a conventional loan up to 97% of purchase price or appraised value but in those cases it is wise to compare how the conventional option compares to government financing.
Who is eligible for this loan?
Qualifying for conventional financing is pretty open to everyone, however pricing becomes worse when there are less favorable conditions involved such as credit scores in the mid to low 600s, high debt ratios, or low equity/downpayments.
What are the benefits of this loan?
- Minimum 3% down payment
- Options for No Mortgage Insurance or Mortgage insurance can be dropped once 20% equity is reached.
- Lower overall payment and costs
- Escrows for Taxes and Insurance may be waived
- Loan terms ranging from 10yr to 30yr