Simplified explanations of common mortgages and loans
Various articles explaining the variations and implications of a commonly used mortgage terminology.
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Conventional mortgage loans may be conforming and non-conforming. Conventional mortgage loans are loans that are not backed by any government enterprise. Government sponsored Enterprise or better known as GSE's. The more commonly know GSE's are FHA, VA, and USDA type loans.
Conforming conventional mortgage loans follow the guide lines of Freddie Mac and Fannie Mae. This is important to the lender as these loans may be sold off to one of them in order to free up funds for lender to make other loans. (in our education center read about the difference between a servicing agent and an investor)
Non-conforming conventional mortgage loans are generally loans that do not meet Fannie or Freddie guidelines and most commonly are loans over $417,000 or better known as Jumbo Loans.
Conventional mortgage loans with a loan to value 80% or less do not require Borrower to pay for mortgage insurance. A qualified consumer can borrow up to 90% loan to value using a conventional loan however, when the loan amount has an loan to value (LTV) great than 80% the borrower will be required by the lender to pay for mortgage insurance. Unlike FHA a borrower is not likely to be charged an upfront funding fee. The Borrower will have to pay a monthly premium along with their monthly principle and interest payment. Borrowers should know that once the equity in the home reaches a LTV of below 78% the mortgage insurance can be dropped if the borrower has requested this action.
When a Borrower has the ability to put down 10% and has the funds for the closing cost, one should review all their options between the different types of loans. As FHA mortgage loans may generally have a lower interest rate (note rate) than conventional mortgage loans, the conventional mortgage loan may have a lower APR. The conventional mortgage loan has the potential of being a less costly loan for the same loan term.
At Solutions First Mortgage Inc. we will look at your total financial profile and give you the best options for you to choose from. Any type of mortgage loan should be your choice not what someone else is trying to promote.
Our service has been designed to remove the stress and misunderstandings commonly associated with buying a property.
For further information about getting the right mortgage for you and to arrange your 'NO-FEE ASSESSMENT'
CALL US on (+1) 941-921-1110