With all of the
many loan programs out there, there is one program that has stood the test of time. This loan is called a conventional loan. What exactly constitutes a conventional loan? To answer this question, let's go over the components of a conventional loan
and determine what it is about it that makes it so conventional.
conventional loan is your run of the mill 15, 20 or 30 year fixed rate loan. What makes them so normal is that the interest rates are based off of the
prime rate set by the market. These programs are all extremely
standardized as they lend up to 80-90% of what the property is worth at the fixed rate explained. The reason they are called conventional is that there are no special
requirements other than having a decent credit rating, having 10-20% to put down on a down payment, and a steady
job history. If you have these things, these loans are pretty easy
types of conventional loan programs work for purchases, bad credit mortgage options, and of course, mortgage refinancing. When getting a mortgage refinance, most of
the time a down payment is avoided on a conventional loan as the home that is being refinanced will have some
equity which will automatically make the loan amount less than the market value of the home. This run of the
mill program has become a safe haven for lenders and investors, which is good for the consume because it helps
to keep the rates low on this type of program. This brings some consistency to the loan world as borrowers don't
have to really wonder about what loan programs are available as the conventional loan has and always will be a
staple when it comes to lender financing.
conventional loans are so prevalent, it means that every single mortgage lender offers this type of loan as a
product. Since every lender offers this program, it can drive
competitiveness between banks, which is a win-win situation for a consumer. This means that the rates will traditionally stay lower as banks are trying to
win your business in a very competitive market. Making sure to do
your research will help you to find a lender that is offering a low and fair rate in order to help you get into
the loan of your choosing. By utilizing the consistency and
stability of a conventional mortgage loan for a mortgage refinance, or for a purchase, you will be able to count
on this type of loan for years to come.