If you are buying a house, there are many types of loans you might consider. One might be an FHA loan, which is a home loan that the Federal Housing Administration backs to protect lenders from borrower default. These are common for first-time home buyers whose credit scores are lower than most lenders require. If you’re a veteran, you might consider a VA loan, which is backed by the United States Department of Veterans Affairs. However, the most common type of home loan by far is a conventional loan.
Conventional loans are not backed by a government agency as FHA and VA loans are, meaning lenders are less protected if you were to default on your conventional loan. As a result, lenders have stricter requirements if you are hoping to get a conventional loan. You’ll need a good credit score, and depending on the size of your down payment, you may need to pay private mortgage insurance. However, qualifying for conventional loans means you can enjoy a low interest rate and perhaps more flexibility.
Here are several examples of conventional loans we offer here at Harbor Mortgage Company:
- Piggyback Loans- Generally, a piggyback loan refers to when you take out a first and second mortgage or additional loans at the same time using the same collateral. These loans are often used when someone wants to avoid paying for private mortgage insurance.
- Fixed-Rate Loans- Your interest rate remains exactly the same for the duration of the loan term when you get a fixed-rate mortgage. This provides stability and protects you from unpredictable increases in the amount of interest you pay.
- Adjustable-Rate Loans- Adjustable-rate mortgages tend to be more affordable than fixed-rate mortgages up front. Your payments can increase or decrease depending on interest rate changes.
To learn more about conventional loans, contact us at Harbor Mortgage Company.