Conventional Loans

Conventional Loans

A conventional mortgage or conventional loan is any type of home buyer’s loan that is not offered or secured by a government entity. Instead, conventional mortgages are available through private lenders, such as banks, credit unions, and mortgage companies. However, some conventional mortgages can be guaranteed by two government-sponsored enterprises; the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac).

Conventional mortgages typically have a fixed rate of interest, which means that the interest rate does not change throughout the life of the loan. Conventional mortgages or loans or not guaranteed by the federal government and as a result, typically have stricter lending requirements by banks and creditors.

Conventional loans are often erroneously referred to as conforming mortgages or loans. While there is overlap, the two are distinct categories. A conforming mortgage is one whose underlying terms and conditions meet the funding criteria of Fannie Mae and Freddie Mac. Chief among those is a dollar limit, set annually by the Federal Housing Finance Agency (FHFA): In 2019, in most of the continental U.S., a loan must not exceed $484,350.

So while all conforming loans are conventional, not all conventional loans qualify as conforming. A jumbo mortgage of $800,000, for example, is a conventional mortgage but not a conforming mortgage—because it surpasses the amount that would allow it to be backed by Fannie Mae or Freddie Mac.

Conventional loan interest rates tend to be higher than those of government-backed mortgages, such as FHA loans (although these loans, which usually mandate that borrowers pay mortgage-insurance premiums, may work out to be just as costly in the long run).

The interest rate carried by a conventional mortgage depends on several factors, including the terms of the loan—its length, its size, and whether it has a fixed interest rate or an adjustable rate—as well as current economic or financial market conditions. Mortgage lenders set interest rates based on their expectations for future inflation; the supply of and demand for mortgage-backed securities also influences the rates.

The final factor in determining the interest rate is the individual borrower’s financial profile: personal assets, creditworthiness, and the size of the down payment they can make on the residence to be financed.



*https://www.investopedia.com

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Independence Home Mortgage Corp. is a residential mortgage company dedicated to the American Dream of home ownership. We are a customer focused mortgage brokerage firm who strives to build lasting relationships by providing personalized mortgage solutions and unsurpassed service. We offer residential loans including conforming conventional, jumbo, FHA, VA, USDA, and portfolio options. We arrange financing for purchase, refinance, construction, and reverse mortgages on multiple property types. ...

 

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- NMLS: 122142
720 Johnsville Blvd
Suite 1205B
Warminster, Pennsylvania 18974
Phone: (215) 323-4120
Email: information@ihmtg.com

 

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© 2020 Independence Home Mortgage Corp NMLS ID# 122142.  All rights reserved.  This is not a commitment to make a loan.  The terms and conditions in connection with any extension of credit are effective as of the date you receive material and are subject to change within the sole discretion of Independence Home Mortgage Corp without notice.  All loans are subject to credit and property approval.  Not all products are available for all loan amounts, programs or credit grades.  Other restrictions and limitations apply.  There are maximum loan amounts.  All loan approvals are subject to underwriting guidelines through third party providers. Independence Home Mortgage Corp is a licensed mortgage broker, NJ Department of Banking and Insurance, Pennsylvania Department of Banking and Securities, Florida Office of Financial Regulation, Michigan Department of Insurance and Finanical Services, & Texas Department of Savings and Mortgage Lending.  Registered Mortgage Broker - NYS Department of Financial Services.  All loans arranged with Third Party Providers.  

 

This site is not authorized by the New York Department of Financial Services. As such, no mortgage loans for properties located in New York will be accepted through this site.

This site is not authorized by the New York Department of Financial Services. As such, no mortgage loans for properties located in New York will be accepted through this site.

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