Let’s be honest—the word “mortgage” is intimidating. Adding the word “conventional” just makes it confusing. What exactly is a conventional mortgage? Aren’t all mortgages the same? Allow me to shed some light.
There are different types of mortgages.
Everyone has a unique financial situation. As a result, a mortgage loan can be put together in a variety of ways. The four main loan types that determine a loan structure are as follows:
- FHA (Federal Housing Administration)
- USDA (United States Department of Agriculture)
- VA (Veterans Affairs)
How is “Conventional” different?
Most conventional loans are subsidized or backed by the governing entities Fannie Mae or Freddie Mac. Unlike the other three mortgage types, which label the entity backing them in their name, conventional loans are categorized by any loan backed by Fannie or Freddie.
What does this mean for me?
In most cases, conventional loans are better than the other three loan types. As mentioned before, wise people choose conventional loans because conventional loans typically have:
- Lower Rates
- Lower Payments
- Flexible PMI options
- Flexible combinations of rates and down payments
Is a conventional loan best for you? Find out now by scheduling a time to discuss your options with one of our mortgage advisors!