Conventional Loan
Conventional Loan
The majority of home loans that are not insured or guaranteed by the government are processed as a conventional loan. Fannie Mae and Freddie Mac which are large publicly traded corporations (agencies) created by Congress to purchase the loans that lenders make.
In essence, they have fewer restrictions than government-backed home loans, therefore allowing lenders to offer their borrowers more accommodating terms and benefits.
Conventional Loan Fixed Rate Benefits:
- Home Purchase- Down payments can be as low as 3%
- Fewer restrictions when compared to government-back loans, like no military affiliation (VA) or rural area (USDA) required
- No upfront mortgage insurance required
- Private Mortgage Insurance (PMI) can be canceled after 20 percent equity is achieved.
- Higher credit scores can result in a lower interest rate.
- Less strict appraisal and property requirements than FHA, VA or USDA loans
- Loan processing is faster
- Term lengths can range between 10 and 30 years
- Security of consistent payments (Fixed Rate)
- Protection from inflation and mortgage rate increases
