Demystifying Conventional Mortgage Loans: Your Comprehensive Guide

Transcript

Are you a first time homebuyer or looking to refinance your current mortgage? Well, we can help you with this and we can demystify whether what the ins and outs are of a conventional mortgage. So let’s demystify those together. Conventional mortgage is a loan type that is not issued or guaranteed by the government.

It’s a loan option offered It’s by private lenders like banks, credit unions, mortgage companies. Ultimately, it’s secured by Fannie and Freddie Mae. Unlike government backed loans such as FHA and VA loans, conventional mortgages typically require a higher credit score and larger down payment. Think of this more like an insurance industry where it’s credit risk based.

The higher the credit is, the lower the debt to debt income ratio is, the better terms you’re going to get. So you get more flexibility in terms of loan and property types. With a conventional mortgage, you choose between fixed rate and adjustable terms. Fixed rate mortgages stay the same throughout the life of the loan, the payment and providing stability.

On the other hand, adjustable rates sometimes start out lower and then they may adjust and go higher later. There’s, those are advantages and disadvantages. So one significant advantage of a conventional mortgage is you avoid paying private mortgage insurance if you put At least 20 percent down and then also if you put less than 20 percent down, then you pay that mortgage down to that 20 percent after you’ve made 24 consecutive payments, that mortgage insurance company, they will typically allow you to release that.

That’s a very specific kind of tricky way because of course, and they’re an insurance company, they want to continue getting premiums for things they’re not covering. I can also help you with that. So keep in mind there are specific requirements such as debt to income ratio, employment history, financial stability.

Lenders can look at that. Actually there’s an algorithm that looks at that and they’re going to determine your credit liability and your viability. In summary, conventional mortgage is a popular choice for those that meet the stricter credit card credit requirements and down payment requirements. We can help you with this and point you in the right direction so you have a better understanding of conventional mortgage loans.

You’ll be better equipped to navigate the home buying minefield and refinancing process. Thanks for watching. Subscribe to our channel. Give us a call anytime. Thanks from Texas Home Loans.