Conventional loans are the best option for those who are the savviest at managing their financial situation and pay attention to the details. These loan programs come with many benefits that can even compete with government sponsored programs. Additionally, they have quick processing time which makes them ideal for those that value their time. If this sounds like you then contact Dawn Palestini of Palestini Home Loans and book a consultation for Conventional loans today. With Dawn guiding you towards the best deals you will want for naught more. She has been assisting clients for decades and comes with a stellar reputation of being loan closer.
What is a Conventional Loan?
While some mortgage loans such as VA loans and FHA loans are backed by the United States Government, there exist some loans which are instead backed by private investing firms. There are, as well, Government Sponsored Enterprises or GSEs which are overseen by The Federal Housing Finance Agency or FHFA. Examples of these include National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac). These GSE and private lenders provide mortgages that are not backed by the federal government and are called Conventional Loans. These loans are not insured by GSE and require the borrower to pay this of their own part.
Conventional Loan Qualifier
A simpler and faster application.
A shorter time to approval.
A conventional mortgage or conventional loan is a home buyer’s loan that is not offered or secured by a government entity.
It is available through or guaranteed by a private lender or the two government-sponsored enterprises—Fannie Mae and Freddie Mac.
What types of Conventional Loans are there?
The Federal Housing Finance Agency and under it the GSE are responsible for maintaining guidelines and standards for mortgage loans in order to retain parity in the real estate market. If a mortgage provided by a private lender meets these guidelines, the GSE is responsible as well for purchasing of these.
Keeping in mind the guidelines set, there are two main types of conventional loans. If a loan meets with the criteria set by Freddie Mac or Fannie Mae, it is known as a Conforming Conventional Loan. Similarly, if the guidelines are not met, the loan is known as a Non-Conforming Conventional Loan. It is to be noted that Non-Conforming Conventional Loans are not purchased by GSE.
What are the benefits of Conventional loans?
Unlike the government sponsored programs like FHA and USDA which usually have a low credit score requirement, Conventional Loans require a much higher credit score in order to qualify for one. On the other hand, unlike those same government programs which have a long processing period for approval, a conventional loan has a much shorter duration until disbursement of the mortgage, allowing the borrower to purchase their desired property sooner. Conventional Loans differ as well with the flexibility they offer on other aspects. The down payment requirement, generally 20% of the property value, is variable with some programs upfronts going as low as 3%. You have a wide variety of options to choose from once you qualify and can benefit from fixed as well as lower markup rates.
The FHA and USDA loans are in place, backed by government programs, to promote new home owners. Their focus is towards a primary residence as the mortgaged property. This does not work for those who are looking to purchase a second home, a summer or vacation home or simply a property for investment. A conventional loan has a trump card at this point as there is no restriction for the property to be primary residence and therefore can be availed to enhance and maximize your property portfolio.
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490 Chadbourne Rd #A172
Fairfield, CA 94534
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