CONVENTIONAL LOANS

A conventional loan refers to any mortgage loan that is not guaranteed or insured by the Federal Government. Since they are backed by private banks and not the government, Conventional Loans can often times have stricter requirements to qualify. These loans typically follow the conforming. Some conventional loans do not follow these guidelines and are known as non-conforming. Whether buying a home or refinancing an existing mortgage, conventional loans could be the optimal choice, with cheap loan closing costs and a variety of flexible payment options.

Conventional mortgage guidelines allow borrowers to apply loan funds to a variety of different property types, including primary residences,
second homes, and investment properties. In addition, conventional loan funds may also be used to purchase condos, multi-unit developments,
modular homes, manufactured homes, and single family residences. Depending on the state in which the property is situated, the maximum
financing available for a conventional mortgage is 80%-95% of the home’s appraised value or the selling price, whichever amount is lower.

Conventional mortgage loans offer many advantages to government-insured loans:

•    Conventional loans provide more underwriting flexibility for lenders since they will not be obliged to conform to secondary market guidelines.
•    Due to being free of government regulation, conventional loan lenders may be more liable negotiate or remove particular loan fees.
•    Lenders for conventional loans are more lenient in forms of collateral, allowing other collateral in addition to the mortgage property.
•    Conventional loan lenders are more likely to finance a personal property in accordance with the mortgage loan, such as furniture and
appliances.
•    Appraisals will only need to meet lender guidelines, rather than the strict regulations set in place by the Federal Housing Administration (FHA)
or the Department of Veteran Affairs (VA).
•    For borrowers who cannot obtain Private Mortgage Insurance (PMI) for one reason or another, lenders may offer to self-insure the loan,
although they will typically charge a higher interest rate as compensation for assuming a greater risk.
•    Lenders may be willing to compromise with borrowers who cannot afford closing costs by offering to fund a percentage of the closing costs in
return for higher interest rates