Conventional loans are loans that are not part of a government program. They typically will cost less than FHA loans but can have stricter qualifying requirements.
Conventional loans have a maximum loan amount that is set by Fannie Mae or Freddie Mac. In most counties, the maximum loan amount is $647,200. (In high-cost counties, it could be as high as $970,800). If your down payment is less than 20%, you will most likely need mortgage insurance or PMI.
As a direct lender, Anchor Mortgage writes our own mortgage insurance (PMI) and is often times greatly reduced compared to other non-direct lenders.
Some of the benefits of Conventional Home Loans are:
Conventional Loans Conform to Freddie Mac and Fannie Mae Guidelines
Simply put, a conventional loan follows the rules set forth by Freddie Mac and Fannie Mae. Lenders have to follow all guidelines and cannot change the terms during the loan process. Conventional loans are a safe bet for most people.
Low Down Payment Options
Conventional loans allow as little as a 3% down payment to purchase your home. Anything less than 20% will requirement PMI aka mortgage insurance, however unlike a government loan the PMI does not last the life of the loan. In fact, once your home has reached the 80% loan to value ratio or LTV, your mortgage insurance goes away permanently .
Competitive Interest Rates for Those with Good Credit
When it comes to conventional loans, those with a higher credit score are rewarded with the best interest rates. This is why it is important to work with your lender on getting your credit score to its highest potential prior to applying for a mortgage. With over 20 years of credit repair experience, Anchor Mortgage is a pro when it comes to getting our customers credit score up. We even have a "rapid re-score" program that can get a credit score up in as little as 72 hours to help you lock in the best rate possible.
You Can Finance A Variety of Homes With A Conventional Loan
Unlike government products, a conventional loan allows for the purchase of many times of homes including, vacation homes, second homes, rental properties, multi-unit homes, mobile homes, fixer-uppers, and many more.
Lower Closing Costs With A Conventional Loan
All government loans include a government funding fee that is added into the loan amount. Although these fees are financed into the loan, they still add a hefty cost that you will pay via your monthly payment for the life of the loan. Funding fees do not apply to conventional loans, so the borrower will avoid these additional costs entirely.