Say goodbye to PMI.
Do you have an excellent credit rating, a steady income and some money saved up? Your mortgage consultant may recommend a conventional home loan. The most common type of mortgage program, conventional loans are not insured by the federal government but typically offer better interest rates, terms of service and lower fees than other loan options. A conventional mortgage for a first-time home buyer typically requires a good-to-excellent credit rating, a substantial down payment and reasonable amounts of monthly debt obligations.
Say goodbye to Private Mortgage Insurance! Unlike FHA loans, conventional loans allow buyers to opt for a larger down payment in exchange for reduced Private Mortgage Insurance (PMI). If you can afford a down payment of 20% or more, you will not be required to carry PMI on your loan. Can’t afford 20% down? Mortgage insurance can be dropped after 20% of the loan has been paid. Conventional loans are a great option for a wide variety of borrowers and offer down payments as low as 3% depending on your financial situation.
First Class Mortgage provides two main varieties of Conventional Loans.
A traditional 30-year Fixed Rate Mortgage features full amortization and is ideal for borrowers looking to put down roots and commit themselves to the community. A 15-year Fixed Rate Mortgage offers the same amortization with a lower interest rate, but the accelerated timeline entails higher monthly payments.
Adjustable Rate Mortgage (ARM)
On the flip side, an Adjustable Rate Mortgage (ARM) is tailored for less-committed borrowers. ARMs generally offer a lower interest rate for the first 5-10 years of a loan before adjusting to a new rate every 12 months. The low interest rates cater to borrowers who don’t plan on sticking around too long or who plan to pay more each month for a quicker amortization.
Hybrid ARMs offer fixed rates for 3-7 years and adjustable rates for the remainder of a 30-year loan. These loans generally feature lower interest rates than their fixed-rate cousins and can be the best choice for people expecting to move or refinance before or shortly after the adjustment.
With close to 100% loan-to-value ratios and a wide range of options for your specific situation, a conventional loan brokered by First Class Mortgage is a no-brainer! From Minnesota, North Dakota and beyond, our consultants work with a vast network of lenders to secure the perfect conventional loan for you.