Think you are finally ready to buy a home? If yes, do you have your finances ready? If not then you will be glad to know that gone are the days when home buyers had to rely on a 30-year fixed rate mortgage as there are multiple mortgage options nowadays. For instance, nowadays, most home buyers prefer to finance their purchase with conventional loans and here is why. In simple terms, a conventional mortgage loan is a type of home loan that is not backed by the government in any way. In other words, these loans are backed and insured by private lenders or investors.
Why They Are So Popular
As noted earlier, the popularity of conventional loans has been on the rise as more home buyers prefer going with this option. This increasing popularity can be attributed to the benefits shown below. Government-backed loans usually have strict guidelines that a home buyer must adhere to for them to qualify. Conventional, on the other hand, are much flexible as the lenders are usually open to negotiating the terms and conditions. This means that both you and the lender can come to an agreement that benefits both of you. For instance, you can negotiate repayment terms that suit you better.
Additionally, due to this flexibility, conventional loans are usually processed faster than FHA loans which spells convenience better because the sooner you get the cash, the sooner you get your dream home and settle down. Based on your financial situation, it is essential that you first contact a reputable company that offers any Conventional Mortgage Services phoenix az to learn about your options.
Down Payment
In the past, one was required to put a standard down payment of 20% for them to qualify for a conventional loan. Even though this rule is still in place, there are so many other options available today. For instance, you can get this type of mortgage with a down payment of as low as 3%. However, if you can afford a 20% down payment, then even better as it means more equity on your home, and you also don’t need to have private mortgage insurance, thus more convenient. Therefore, you end up winning whether you decide to go with the 20% or lower down payment option.
Low Interest On Loans
Apart from the flexibility of down payments, conventional loans are also popular among home buyers due to the low-interest rates charged. Due to the fixed, stringent rules of FHA and VA loans, most FHA and VA mortgage lenders are often unable to offer loans that suit a specific situation. On the other hand, as noted earlier, conventional loan lenders are often backed with private investors which means they don’t have to follow a particular set of rules. As a result, when you shop around, it is possible to find a lender who offers a mortgage at a lower interest rate, in a bid to keep up with the competition. Therefore, unlike banks which often provider nearly similar interest rates, conventional loan lenders usually offer varying, yet low-interest rates.