If you are scouting out lending options as a home buyer, you probably have come across varying types of loans, and one of the most common you will see is a conventional loan. This type of loan is a mortgage that is not attached to a government agency like the Federal Housing Administration (FHA) or the Department of Veteran Affairs (VA).
These loans further break down into a sub categories but a large number of them are regulated by the terms provided by Fannie Mae and Freddie Mac. Loans that meet the requirements set forth by these entities are called conforming loans. There are also non-conforming loans. These loans, which you probably guessed, do not meet the requirements established by Fannie Mae and Freddie Mac. In most cases, this is because they exceed the conforming loan limit. Conventional loans that exceed the conforming loan limit are commonly referred to as jumbo loans. Jumbo loans are a great option for anyone looking into higher-priced homes, second homes, or investment properties.
Another conventional option you might consider researching is portfolio loans. Portfolio mortgages are quite a bit different than other conventional loans so their terms and features can work out for those that may not qualify for a typical loan. Portfolio loans are loans that a lender keeps on their books rather then selling on the secondary market. This means they do not need adhere to anyone’s guidelines but their own. You may be able to get approved for a portfolio loan when you are unable to qualify for other loans.
Is A Conventional Loan Right For You?
Choosing the right type of loan, whether it be conventional or government backed, it’s important to consider what type of mortgage is going to suit your financial situation the best.
The first thing you’ll want to consider is your credit score and credit history as it’s going to determine your creditworthiness which in turn is a big part of how the lender qualifies your loan.
The amount you can afford as a down payment is also something you’ll want to think about when discussing your lending options. If you are able to come up with a large payment, you may have better options in regard to your interest rate to keep your payments lower than if you didn’t have the down payment available.
The last thing you’ll want to take into consideration when determining the type of loan that works best for you is why you are buying a home. If you are purchasing for the first time versus looking for an investment property, the type of loan is going to change based on your situation.
Reach Out Today!
If you have any questions or need more information about conventional loan options, we are here to help. Please reach out to us at North Georgia Lending in Cumming, GA for more information today.