Conventional mortgages are considered by many to be the most common loan option in the mortgage industry. These loans are insured or guaranteed by the government, so lenders are not protected if a borrower defaults on this loan. Therefore, lenders then demand higher down-payment requirements, with many calling for 20%. Conventional mortgages possess lower debt-to-income ratios and stricter income and credit requirements than many other mortgage loan options.
PMAC Lending can help you secure a conventional mortgage with a fixed or adjustable rate. ARMs will maintain a constant rate before beginning to adjust to the current market. Some banks do offer longer and shorter repayment terms, yet 15 and 30 years are the typical standard with conventional mortgages.
No noteworthy or significant occupancy or property restrictions come with conventional mortgages, however, these loans are classified as conforming or non-conforming. Mortgages meeting Fannie Mae and/or Freddie Mac underwriting guidelines are considered conforming. Non-conforming conventional loans do not meet either government entity’s qualifications, and are deemed as “jumbo mortgages”.
The main determining factor in classifying a conventional loan is the amount. Loans less than $417,000 are typically conforming. Jumbo mortgages are greater than $417,000, and borrowers using this specific type of conventional mortgage to purchase a home will have higher interest rates due to the risk being greater.
Conventional loans do have general loan limits in high-cost and low-cost areas. In the locations of the United States where housing costs are greater than the average, conventional loan limits can be higher. For a high-cost area, the limit is $625,000 for a single-unit property. PMAC Lending serves the Portland, South Portland and Falmouth areas in Cumberland County in Maine.
Here are the conventional loan limits for our county:
|Number of Units||Max original principal balance||Alaska, Guam, Hawaii, and U.S. Virgin Islands only|
Borrowers often find using the conventional mortgage option to be most beneficial to reaching their financial goals. Interest rates are considerably lower, repayment conditions are better and the processing of these loans is completed at a more accelerated pace.
Immediate equity is also typically granted to borrowers, plus a private mortgage requirement is waived with a 20% down payment. As an existing mortgage achieves a loan-to-value ratio of 80%, a borrower is allowed to cancel. Additional attractive features of conventional mortgages include lower closing costs that can possibly be included into the loan, as well as the lack of a penalty for early repayment.
PMAC Lending is the premier place to handle all of your conventional mortgage needs to purchase a home! Call us today at (207) 321-5307 or click here to get started online!