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A conventional mortgage is a type of home loan that is not insured or guaranteed by the government. This means that the lender who issues the loan takes on more risk if you are unable to make your payments. For this reason, conventional mortgages tend to have slightly stricter eligibility requirements, but are still often times the best solution if you qualify.
One of the benefits of a conventional mortgage is that you won’t be required to pay for private mortgage insurance (PMI) if you make a down payment of at least 20%. PMI is insurance that protects the lender in the event that you default on your loan.
Because conventional loans are not backed by the government, there are fewer restrictions when it comes to the types of homes that you can purchase.
One of the drawbacks of a conventional mortgage loan is that you will typically be charged a higher interest rate than you would with a government-backed loan. This is because mortgage lenders perceive conventional loans to be riskier.
Another drawback is that you may need strong credit in order to qualify for a conventional mortgage loan. Lenders will look at your credit history and score to determine whether you’re a good candidate for a loan.
There are a few things that you can do to improve your chances of qualifying for a conventional mortgage loan.
If you want to speak to a mortgage broker today, call 706-250-2006, or click here to set an appointment.
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