Any home loan not backed by a government agency is defined as a conventional loan. Many popular home loan programs today including FHA loans, VA loans, and USDA loans are backed by the government. In many cases, these types of loans are tailored to borrowers with below average credit scores or limited down payment availability. Conventional loans on the other hand are often a valuable option for buyers with stronger credit and income or for those interested in a home loan that exceeds the limits placed on government-backed options. Rick Bernstein of Assured Mortgage Inc. offers great rates and terms on conventional loan options to homebuyers throughout Brookfield and the surrounding Wisconsin areas.
Conventional mortgages can be considered conforming or non-conforming loans. Conforming loans are eligible for purchase by Fannie Mae and Freddie Mac. Non-conforming loans on the other hand are not. The loan amount is generally the first thing that is looked at when determining if a loan is conforming or non-conforming. $453,100 is the conforming loan limit in most cases. In certain high-cost areas, loans can reach as high as $679,650 while still being considered conforming.
Historically, Brookfield conventional loans have required down payments of 20% or more. Today, there are conventional loan options with down payment requirements as low as 3%. There are benefits to making a larger down payment though. Perhaps the most important is that a 20% down payment allows buyers to forgo private mortgage insurance (PMI). PMI may still be required if you choose to make a smaller down payment. Once 20% equity is reached, you can cancel this insurance. The mortgage insurance on government-backed loans such as FHA loans cannot be cancelled.
Lenders will have different requirements when it comes to credit score, income, and debt-to-income (DTI) ratio. Depending on the size of the down payment being made, there can be some flexibility in these areas. Those making larger down payments may be approved with lower scores than those who prefer a lower down payment option. The exact requirements will depend on each buyer’s unique financial situation.
Conventional loans are available with fixed-rate, adjustable-rate, and hybrid rate options. Many homeowners prefer a fixed-rate mortgage as they offer long-term stability and peace of mind. If you choose to go with an adjustable-rate mortgage (ARM), the interest rate on your mortgage will vary from time to time based on market conditions. ARMs typically start out with lower rates than fixed-rate mortgages. Buyers who plan to to relocate or refinance within a few years of their purchase may find that an ARM is best suited for their needs.
Rick Bernstein of Assured Mortgage Inc. offers great rates and flexible terms on Brookfield conventional loans. Whether you are purchasing your very first Wisconsin home, or refinancing your existing mortgage, we can tailor a conventional loan to meet your exact needs. For more information on our conventional loan products and services, contact us today.