Conventional 30-year home mortgage loan
Charlotte, NC, continues to reflect a vigorous economic recovery as it boasts a very busy and healthy real estate market. Fairway was excited to see Charlotte listed as number 1 on Yahoo Finance’s ‘Best Cities For High Pay and Low Expenses’ and number 4 on Forbes List of ‘The Fastest Growing Cities Since the 2007 Recession.’ We have seen a lot of homes going up on the market and spring is sure to bring even more. Are you ready to list your home to move into a larger home? A conventional loan might be right for you!
If you are planning to borrow less than $417,000 for a single-family home, you should be looking at a ‘conforming’ conventional loam. Conventional conforming loans are not made by a government entity, like FHA and VA loans, but instead follow the terms and conditions that follow the guidelines set forth by Fannie Mae and Freddie Mac. These established guidelines generally call for a minimum credit score, certain income requirements, and a minimum down payment (generally between 5% and 20%).
Conventional home mortgage loans have either fixed or adjustable rates. A fixed-rate mortgage, or FRM, means that your mortgage monthly payments remain fixed for the period of the loan and typically have a term of 15 or 30 years. A shorter-term loan usually results in a lower interest rate. While an adjustable-rate mortgage, or ARM, fluctuates in relation to the rate of a standard financial index therefore, monthly payments can go up or down accordingly.
Due to origination fees, down payments, mortgage insurance, and points and appraisal fees, borrowers completing a conventional loan may have to show up at closing with a sizable sum of out-of-pocket money, or be prepared to roll over some of these costs into their mortgage amount, which may result in a higher loan rate. If you are selling your current home, however, you will likely have money from your sale to offset these costs. Also, because these mortgages generally require higher down payments than the other options, the homes equity can build up quicker.