When A Conventional Mortgage Is Your Best Option
Buying a new home should be an exciting, heart-warming time. After all, you’re not just choosing somewhere to live, you’re choosing somewhere to make memories with family and friends. It may be where you watch your kids or grandkids grow up, or it may be your first foray into true adulthood. Either way, a home is so much more than four walls and a roof over your head. Unfortunately, the process of finding a lender and getting approved for a mortgage loan can be a daunting one — and that can suck a lot of the excitement from the process if you don’t know where to start.
Working with a mortgage broker is a great option to find mortgage financing, especially if you’re not quite sure which option is the best match for your needs. Mortgage brokers, like the team at Patriot Home Mortgage, work with a range of lenders, so we can help you find the best match for your specific financial situation, rather than trying to shoehorn you into one of only a few options. In addition, it can be helpful to learn about the different types of mortgages out there, and the differences therein. For example, one of the more common options, the conventional mortgage, can be an excellent money-saving option or a less-than-stellar one. It all depends on your financial situation.
What It Is
In the simplest terms, a conventional mortgage is any home loan that isn’t backed or guaranteed by a government entity. Options like the FHA mortgage, USDA mortgage, and even VA home loans are all backed in some way by a government entity, which means those loans have to meet certain criteria set forth by the backing entity. Conventional mortgages, on the other hand, tend to come with fewer industry-wide restrictions or qualifiers. They are offered by banks and other financial institutions, so the eligibility requirements will depend on what that particular institution decides the requirements are.
That being said, conventional mortgage options fall into one of two categories: conforming and non-conforming. Conforming conventional mortgages are those that stick to the eligibility standards as determined by the government sponsored institutions Fannie Mae and Freddie Mac. The non-conforming conventional mortgages are options like a jumbo mortgage, which provides larger than average loan amounts for those who can afford a larger, more costly home.
The primary benefit of choosing to go the conventional mortgage route is that of flexibility. The conventional loan options at one institution may be entirely different from the bank across the street. For the diligent mortgage shopper, conventional mortgages mean there’s a better chance to find the right loan to fit your financial needs — which often means things like a lower interest rate, no mortgage insurance requirement, and lower monthly payments for the life of the loan.
Conventional mortgages can also be the better option for those who need a loan to be processed more quickly. Since the mortgage approval process is done by the lender (with or without the help of a mortgage broker), and doesn’t need to abide by governmental criteria, it can often be processed and approved more quickly.
Applying For A Conventional Mortgage
The first step in applying for a conventional mortgage should always be shopping around to learn about the variety of different options available that fit your financial situation. You can undertake this on your own, but a mortgage broker is often a faster and more in-depth way to do so. Mortgage brokers work with a wide range of different lenders, so we can often narrow down to a few of the best options quickly and easily. The other important thing to remember is that mortgage brokers can provide you with valuable education throughout the process. We know a wide range about a variety of different loans and lenders, so we can explain to you why one choice is more beneficial for your specific needs than another.
Before submitting your mortgage application, it’s also important to get your financial information together. Taking a few months to improve your credit score, pay down debt, and save up a larger down payment can make a huge difference in monthly payments — which can result in years of savings. Want to learn more? Contact the team of specialists at Patriot Home Mortgage to learn more and get help finding and applying for the best mortgage for you!