Conventional mortgages are the most popular form of home financing for buyers in the United States. However, it may not always be clear how these loans differ from other loans, such as those provided by government agencies. To help you gain a better understanding of conventional loan basics, here is a quick guide with further information:
When obtaining conventional financing, your lender will examine your financial situation. The loan officer may request information including your credit score, income statements and debt to income ratios.
A down payment is required for conventional loans. Each lender has different minimum requirements, but the larger the down payment, the less money you’ll have to pay back over time.
Many believe a 20% down payment is required for conventional loans, but the minimum requirement is typically much lower. You can find mortgages with minimum down payment requirements anywhere from 3% to 20% of the overall purchase price.
Your choice of down payment amount can affect the terms of your mortgage, like interest rate or the need for private mortgage insurance.
Government-backed home loans have specific features to suit some homebuyers.
The Federal Housing Administration (FHA) is a government institution offering home loans for buyers who meet certain qualifications. Government-backed loans have advantages for those with bad credit or other financial roadblocks, but require other qualifications for approval.
Conventional mortgages tend to have higher interest rates than FHA loans, although these loans typically require borrowers to pay mortgage-insurance premiums.
Interest rates charged on a conventional mortgage vary by several factors, including the term and amount borrowed. However, interest rates are also subject to change every year based on the overall economy. Many buyers choose to wait for a period when interest rates are lower to apply for a mortgage, regardless of the loan type.
Ultimately, your choice of loan will depend on your personal circumstances. The more you know about different types of mortgage, the better equipped you’ll be for your journey into thefinancial real estate marketplace.
Susan Shuxian Hu has been a dedicated realtor serving in Silicon Valley since 2010. With great passion, outstanding negotiation skills and due diligence, she has helped many buyers and sellers in their real estate needs. Living in West San Jose for more than 14 years, she has broad knowledge in Cupertino, West San Jose, Los Altos and Saratoga. She has enormous patience working with buyers and never tired of showing all possible properties that may fit client’s needs. Clients appreciate her best service to their satisfaction. She specialized in luxurious real estate purchase in Los Altos, Cupertino, Saratoga and Palo Alto. She also helped friend and past client’s referral working in San Francisco, Foster City and far reached Bay Area.
Susan Shuxian Hu was graduated in East China Normal University in Shanghai with bachelor and master degrees in Bio science. She came to US in 1989 and earned her Ph.D. in Molecular Genetics in Texas A&M University in 1996. After one year of postdoc in Southern Florida University in Tampa, she moved back to Orlando with her family and started working in Lucent Technologies. In 2002, Susan moved to California, Silicon Valley joined a start-up company. Since then she worked in high tech Corporation till 2009. Driven by her dream job pursuing, she found her passion working in sales by helping people in real estate after one year of education in De Anza business and real estate law study. Since then, she has been serving many people in Bay Area for their real estate needs.
With bilingual advantage, she has been actively working with Chinese immigrants as well as local engineers and residents. With rich high tech background and connection with Chinese community, Susan has served in luxurious real estate in last a couple of years.