Monday, May 28, 2012

Conventional Home Loans

Conventional Loans

These days there are many different home loan programs for you to choose from, one of the most popular and tried loan programs available is a conventional loan. A conventional home loan is any mortgage which is not guaranteed or insured by any government agency. One of my biggest specialties is helping clients with their Manhattan, Brooklyn and Long Island conventional loan needs and questions. I created this page to inform you on the details of a conventional loan.

Conventional loans are one of the original home loan products. They follow guidelines set by Fannie Mae. Fannie Mae is a corporation created by the federal government that buys and sells conventional mortgages as well as setting the maximum loan amount and requirements for borrowers. When loans meet the maximum loan limit set by Fannie Mae are called conforming loans, since they confirm to those limits. The loan limits for Manhattan, Brooklyn and Long Island are $625,500. This a good amount higher then the maximum loan amount for a conforming loan which is typically $417,000, because home prices in those areas are higher.

Some of the advantages that conventional loan programs have over other loan program are that they allow more flexibility when it comes to paying certain loan fees. There is also more flexibility when it comes to the appraisal. As a Senior Loan Officer I have access to more options then just going to a bank. This means I can be more creative when it comes to finding you the perfect conventional loan terms.

Conventional loans are broken down into two major groups. There are fixed rate and adjustable-rate loan programs.

Fixed rate programs mean you pay a fixed interest rate through the length of the loan program. When rates are low as they are now, the advantage is that if rates ever go up it won’t affect your loan. My most popular fixed rate conventional loan programs are 30 year and 15 year fixed terms.

An adjustable-rate conventional loan means the loan is adjustable, so the interest rate can change. There are some adjustable loan programs that stay fixed for a certain amount of time and then turn into adjustable rates. These are my most popular adjustable loan programs, they include 3/1 arm, 5/1arm, 7/1 arm, and 10/1 arm. First part of that means the amount of years that loan will be fixed before it turns into a fully adjustable rate. So the 3/1 arm will stay fixed for 3 years, the 5/1 arm will stay fixed for 5 years and so on.

Even though there is some flexibility, conventional loan programs tend to have higher down payments. However the main advantage is that conventional loans tend to have lower interest rates. So if you have money saved up a conventional loan could be the loan for you