Conventional Loans Purchase and  Refinance

 

 

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Purchase

Purchasing a home in today’s market affords the home buyer 2 major advantages.
Extremely low interest rates and a recovering housing market which means low prices.

A conventional Purchase typically is associated with a minimum of 20% for the down payment.
Conventional loans with less than 20% down payment are available but will require mortgage
insurance and will be subject to Mortgage insurance guidelines. Your loan officer will help you
analyze and decide on your best option.

Low Down Payment Purchase loans are available but will include Mortgage insurance.

Government (FHA) purchase loans can be originated with as little as 3.5% Down.
Loan Balance must be within FHA county Limits.

VA purchase loans can be originated with no down payment. Must be within VA county limits.

 

Refinance

Today’s interest rates are at an “all time” low. Refinancing now can have long term positive
benefits as well as short term savings and should play a major role in your overall financial planning.

Over the past 5 years the housing market has experienced major corrections in home values and
because of these changes One Critical factor in determining your loan approval
is “Loan to Value” ratio or LTV.

“Loan to Value” Ratio – Or LTV. This is the ratio between your current home Value and your new
loan Balance. Conventional loans require your LTV or “Loan to value” to be 80% or less.
“Loan to value” ratios higher than 80% and less than 95% require mortgage insurance. Our staff can
help you quickly determine the value range of your home and your LTV.

If your loan to value ratio is greater than 80% then you may qualify for the Harp 2.0 program
for your refinance. One of our loan officers will help guide you through this mortgage planning step.

 

What is a Conventional Loan? 

These types of loans conform to conditions and terms of Government sponsored enterprises or
GSE’s such as Fannie Mae and Freddie Mac. A conventional loan means a home buyer’s mortgage
is not backed or insured by a government agency such as the Federal Housing Administration (FHA)
or Veterans Administration VA. 

Conventional loan balances are determined by the new loan balance and the county you reside in.
Conforming limits are loan balances that are less than or equal to 417,000.

High Balance conforming loan limits (see County limits for your area). These loan balances above
417,000 and up to and below the county limit will fall under the conforming interest rate pricing structure.
These are not Jumbo loans

Loan Balances that are higher than your county loan limit are considered Jumbo Loans.

 

Types of Conventional loans available:

Fixed Rate Loans

30, 25, 20, 15 and 10-year terms are all available with fixed rate. We also can provide you
with a custom loan term as well. Contact a Loan Officer for more information.

ARM (Adjustable Rate Mortgage)

3/1, 5/1, 7/1 and 10/1 ARM's. Monthly payments based on a 30 year repayment schedule.
The rate stays fixed for the first 3, 5, or 7 years (depending on chosen term), and then will adjust
annually thereafter.

 

Major Factors that affect your approval

“Loan to Value” Ratio – Or LTV. This is the ratio between your current home Value and your new
loan Balance. Conventional loans require your LTV or “Loan to value” to be 80% or less.
“Loan to value” ratios higher than 80% and less than 95% require mortgage insurance.
Our staff can help you quickly determine the value range of your home and your LTV.

“Debt to income” ratio – DTI. determined by calculating the projected housing costs and actual
recurring monthly expenses. The total of all monthly expenses, including housing, must not exceed
45 percent of the buyer’s income. Some programs allow for up to 55% DTI – See Harp 2.0

Credit score - A FICO credit score of 620 and higher increases a borrower’s rate of approval and
may reduce the loan’s interest rate. Higher credit scores will improve closing cost scenarios and can
directly affect interest rates available to you. All 3 credit bureaus are used for mortgage lending. The
middle score of the borrower is used. If a co-borrower is considered, then the lowest of the two borrowers
middle FICO score will be used.

Apply Now to update your credit report. Remember credit reports from free websites cannot be used for
mortgage lending purposes, but can provide you with a ballpark score.