New Empire Mortgage Solutions (NLMS ID 1949736)

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Conventional Loan

Get the Best Rates, Terms, and Service with a Conventional Loan - The Gold Standard of Mortgages for Homebuyers Who Want More Control and Flexibility!

What is a Conventional Loan?

A conventional loan is a type of mortgage loan that is not guaranteed or insured by a government agency, such as the FHA or VA. Conventional loans are originated and serviced by private lenders, and are typically offered to borrowers with strong credit scores and a stable income.

Conventional loans are available for various types of properties, including single-family homes, multi-unit properties, and condominiums. They come in two main types: conforming and non-conforming. Conforming loans meet certain criteria set by Fannie Mae and Freddie Mac, the two government-sponsored entities that purchase and securitize mortgages, while non-conforming loans do not meet these criteria.

One of the main differences between conventional loans and government-backed loans like FHA and VA loans is the down payment requirement. While FHA loans require a minimum down payment of 3.5% and VA loans don’t require a down payment, conventional loans typically require a down payment of at least 3% for a primary residence, and up to 20% for an investment property.

Conventional loans also require borrowers to pay for private mortgage insurance (PMI) if they make a down payment of less than 20%. PMI is a type of insurance that protects the lender in case of default, and the cost of the insurance is typically added to the monthly mortgage payment.

Interest rates for conventional loans can vary depending on a borrower’s credit score, loan-to-value ratio, and other factors. Conventional loans may offer fixed or adjustable interest rates, and typically have terms of 15 or 30 years.

Benefits of having a Conventional Loan

Lower interest rates

Conventional loans may offer lower interest rates than other types of mortgages, depending on the borrower’s credit score, debt-to-income ratio, and other factors.

No mortgage insurance required with a high down payment

Borrowers who make a down payment of at least 20% of the home’s purchase price may not need to pay for mortgage insurance, which can save them money over the life of the loan.

Flexible down payment options

While conventional loans typically require a down payment of at least 3%, borrowers may be able to put down a larger down payment to reduce their monthly mortgage payment or avoid paying mortgage insurance.

No upfront mortgage insurance premium

Unlike FHA loans, conventional loans do not require an upfront mortgage insurance premium (MIP), which can save borrowers money at closing.

Options for loan terms

Conventional loans may offer a variety of loan terms, such as 10, 15, 20, or 30 years, giving borrowers the flexibility to choose the term that works best for their budget and financial goals.

Can be used for a variety of property types

Conventional loans can be used to finance a variety of property types, including single-family homes, townhomes, condominiums, and even multi-unit properties, making them a versatile financing option.

Overall, a conventional loan can be a good choice for borrowers who have good credit and can make a down payment of at least 3% of the home’s purchase price. However, it’s important to carefully consider your financial situation and work with a New Empire Mortgage Specialist to determine if a conventional loan is a right choice for you.

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