There are many loan options available for Americans wishing to own a home can consider. One of the most common options is a conventional mortgage, which is not guaranteed by the Federal Housing Authority or the Veteran Departments. There are secured conventional loans and unsecured, which are mostly based on the creditworthiness of the borrower. If you are considering a Conventional Mortgage Services phoenix az, here are some of the benefits you should expect.
1. Low-Interest Rates
As compared to VA and FHA loans, conventional loans have the lowest interest rates. Lenders have the freedom of incorporating different rules and regulations to fit various circumstances. Most of the conventional loans have fixed interests, which mean that the rate is not influenced by the prevailing market conditions. However, you can shop around and lower both the interest rates and the closing costs.
2. Stable and Predictable
When it comes to money, it is very hard to find stable interest rates. As highlighted earlier, conventional interest rates are not affected by the prevailing market conditions. They remain stable in an unstable money market. As you already know, lending interest rates depend on inflation, market conditions, and other external factors that you cannot control. You don’t want your rates to change with time or without your knowledge. With conventional rates, you know what you will pay regardless of what happens in the market.
3. Low Down Payment
High down payments are some of the extras that have limited a considerable number of people from owning a home. Most of the lenders want borrowers to deposit huge amounts of money for considerations. However, a conventional mortgage requires a very low-down payment. You can pay a down payment of 3% of the total value of the property and access loan. However, you will be required to have mortgage insurance, which somehow increases the cost.
4. Available in Short Term
Paying loans for a longer period increases the overall cost of the loan due to increased interest rates. However, a short-term loan allows you to save huge amounts of money, which you would have otherwise paid in the form of interest. If you are willing to pay your loans within a short period by paying lump sum amounts, you can consider choosing conventional loans as compared to other types of loans in the industry.
5. Lower Closing Costs
Lenders require borrowers to pay huge amounts of money in closing cost, which does nothing good to the borrower other than increasing the costs associated with the loan. However, conventional loans are easy to process and close, which means that closing costs are not high. Some of the closing costs that you have to pay, although very low, include home inspection fees, title insurance, an escrow deposit, legal fees, and origination fees.
Lastly, you should know that conventional mortgages are offered by private lenders. This allows you to negotiate on a down payment, interest rates, closing fees, and even repayment period. However, you should put into account that you will be required to pay penalties in cases of late payment, especially when your creditworthiness is not good.