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.
Kim Cuomo brings a 25 year wealth of experience and passion to the world of real estate, having dedicated over two decades to serving clients across the vibrant landscapes of South Florida. With a background as a paralegal, Kim's transition into real estate was not just a career change, but a discovery of her true calling. Her deep-rooted love for the industry is evident in the personalized, hands-on approach she adopts with each client, ensuring they feel valued and supported through every step of their journey.
Whether navigating the complexities of a first-time home purchase or orchestrating the sale of a luxurious $30 million estate, Kim's expertise spans the full spectrum of residential and commercial real estate. Her reach extends across Palm Beach County, Martin County, St. Lucie County, Broward County, and Miami-Dade County, offering a comprehensive understanding of the unique markets within each area.
Kim Cuomo's dedication to excellence and her ability to forge meaningful connections with clients make her not just an agent, but a trusted advisor and friend in one of the most significant transactions of their lives. Her commitment to providing exceptional service is unwavering, making her a standout professional in the South Florida real estate scene.
