If you are buying a home and are not purchasing with cash, you are most likely considering your finance options and the most common type of loan is a conventional loan. A conventional loan is not backed by the government like an FHA or VA loan.
Types of Conventional Loans
Another type of conventional loan is a non-conforming loan and usually has a larger limit than conforming loans and also can be known as jumbo mortgages. Since these loans are above the limits set by Fannie Mae and Freddie Mac, they don’t “conform” so they are called non-conforming loans, but they do vary based on county so it is important to research the limits in the area in which you intend to purchase.
If you are looking for a loan for a specific purpose such as investment, you might consider researching portfolio loans. Portfolio mortgages are quite a bit different than other conventional loans so their terms and features can work out for those that may not qualify for a typical loan. This means that if you happen to have stocks and bonds that can be kept in portfolio for the life of a loan, you may qualify for this type of loan even if you don’t qualify for a typical loan.
The last type of conventional loan you may want to research if you have a lower credit score is a sub-prime mortgage. The interest rate and fees are usually higher, but they do give those with less than perfect credit a chance to still purchase a home. These come with special regulations created by the government but they are not backed by the government so they are still considered conventional loans.
Is A Conventional Loan Right For You?
The first thing you’ll want to consider is your credit score and credit history as it’s going to determine your creditworthiness which in turn what is used to qualify you for a loan in the first place.
The amount you can afford as a down payment is also something you’ll want to consider when discussing your lending options. If you are able to come up with a large down payment, you may have better options in regard to your interest rate to keep your monthly payments as low as possible.
The last thing you’ll want to consider when determining the type of loan that works best for you is why you are buying a home. If you are purchasing for the first time versus if you are looking for an investment, the type of loan is going to change based on your situation. If you want to stay in the home until it’s paid off, you’ll want to make sure your payments consistent over the life of the loan.
Reach Out Today!
If you are thinking about applying for a loan and have questions, we would love to help guide you through the process. Don’t hesitate to reach out to Family First Mortgage in Lafayette, LA today!