Today, when people begin to look for a house, they want a mortgage that they understand and that’s where conventional mortgages come in for the buyer of the home. The conventional mortgage is a mortgage which has been around for some time and most bank loans on new home purchase will be under the pretense of a conventional mortgage.
There are several different types of conventional mortgages. The largest conventional mortgage is called the Jumbo mortgage which is a mortgage on a large purchase over $359,000 with the amount changing by lender at times or at least, posted differently among lenders. The jumbo mortgage is designed to give the borrower the opportunity to pay less per month for more house. As you can see, the jumbo mortgage is designed for homes or property which requires a lot of money to purchase. The jumbo loan will require a very credit sound borrower in order for the lender to even consider the buyer. The buyer will fall under different lending guidelines and will likely find the lender takes longer in deciding whether or not they will loan on the house.
Many banks will run special conventional mortgage promotions throughout the year. If the interest rates fall, then lenders will make a big deal out of their promotion and throw in the low interest rate they are offering. In most cases, their interest rates won’t vary much from any other lender but the loan origination fee may so check with any lenders who are offering special promotions on lending and check for information on loan application fees and other fees.
Conventional mortgages are used more commonly than many other mortgages in the business. However, people need to have good credit in order to appeal to a lender who is considering loaning money out. The borrower will need to show they are credit worthy individuals, have time in on a job, pay their bills currently and can basically afford the property they are trying to buy.
Individuals who can’t get the best rates under the traditional conventional loan, called a conforming loan, will likely be able to apply for a non-conforming loan. However, non-conforming loans are often very expensive. The non-conforming loans will likely have a much higher interest rate and will have some particulars and guidelines for loan officers to follow closely before processing the loan application.
Traditional lenders will not be able to appeal to non-conforming loan applicants as much as lenders who lend through mortgage brokers. Banks have strict guidelines and can usually find a loan match for conforming loans but aren’t willing to go out on a limb for a non-conforming applicant as much as a mortgage company will. The fact is that the loan companies have more leeway and will work harder for the applicant who has less than perfect credit. The person who has the less than perfect credit will likely find mortgage companies far more accommodating than their credit deserves which makes things easier for the person borrowing the money. Not only will they feel like they can buy the house of their dreams but they will feel like their business is appreciated. Banks often give the non-conforming applicant the feeling they are doing them the biggest favor in the world if they loan to them and mortgage companies give off the impression they appreciate non-conforming borrowers. This is due in part because they see it everyday.
Overall, conventional mortgages are the way to go when buying a house. Everything is pretty much in black and white on the loan. You don’t have to cut through the red tape to understand your loan documents and you are often given the best interest rate your home can find which is what you need considering the large amount of money you will normally borrow for your home purchase.
Talk to your own bank or local mortgage companies when you are ready to buy a home. Find out before you begin to search for a home, what options you have and find out what your credit looks like to the lender. Who knows, you may qualify for a jumbo loan and if not, you may come pretty close!
http://www.1st-in-loan.net/loan_pf/Conventional-Mortgages.html
