Conventional Loan programs are more common with larger down payments and high credit scores. Borrower's can put 20% down to not have mortgage insurance (PMI). If a buyer does not have 20% down they can take advantage of a Conventional Loan with as little as 3% down.
Types of Conventional Loans
- Fixed Mortgages - The 30-year fixed-rate mortgage is the most common program which allows a lower payment on a 30 yr. term and the rate stays fixed for the term. Although rates may be higher for the longer term, it will give you the security of being fixed for that term. If you like flexibility and want a fixed rate this program may be right for you. We have multiple fixed rate options such as 20 yr. mortgage, 15yr. mortgage, & 10 yr. mortgage to help our clients. When taking a lower term you are shortening the timeframe you will have the mortgage for which in most cases will increase your monthly payment even with lower rates. However it does offers all the advantages of the 30-year loan, plus a lower interest rate and allows for earlier payoff. Shorter terms are Great options when deciding how long you want to have the mortgage for. If you don't want a 30 yr. mortgage payment, taking a lower term will allow you to payoff your mortgage sooner and experience mortgage freedom.
- Closing Cost Assistance on Conventional - On Conventional Loans the maximum allowed to recieve in seller assistance toward closing costs is 3% of purchase price if you have less than 10% down on the loan. If your down payment was 10% or more you would be able to ask seller for up to 6% of the purchase price toward closing cost.
- Combo Loans - are when you take a 1st & 2nd to eliminate PMI (mortgage insurance). How does it work? When purchasing your home you can obtain a 1st mortgage amount for 80% of the purchase price and a 2nd mortgage or Home Equity Line for 15% allowing minimum down payment only 5%. This will eliminate mortgage insurance and could reduce your monthly payments starting off. These loans have also been called 80-10-10 or 80-10-5 loans. In most cases the Home Equity can be used as the balance is paid down. Although every situation is different for every client I will review these options with you to make sure the program you choose is the one that would best fit your needs.
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