Conventional LoansConventional home loans are mortgage loans that eligible to be sold to Fannie Mae or Freddie Mac. Fannie Mae and Freddie Mac, are financially insured through the backing of the U.S. government. Conventional loans make up about seventy percent of all mortgage loans originated in the U.S. Conventional loans are restricted based on the size of their loan, in most cases this limit has been $ 417,000 nationally, except for Hawaii and Alaska, which had slightly higher loan limits. Conventional loans are underwritten to predetermined underwriting guidelines, typically using an automated computer system such as Fannie Mae’s desktop underwriter that analyzes a borrowers risk based on factors such as income, credit, assets, loan to value, employment type, etc. Most lenders typically underwrite loans strictly following these guidelines, but may place further restrictions such as loan to value or debt to income restrictions on loans they underwrite. Conventional loans generally range between ten and thirty years in length. A borrower should expect to put a minimum of five percent down or have five percent equity or more if they are looking to refinance their mortgage on a conventional loan. A borrower can purchase or refinance their primary residence, second home, or investment property (up to 4 units) using a conventional loan. Conventional loans require a borrower to be in good credit standing and place restrictions on borrowers who may have filed bankruptcy or had a home foreclosure in the past. Borrowers who apply to refinance or purchase a conventional mortgage loan that do not have a minimum of twenty percent down or twenty percent equity will be required to obtain mortgage insurance. Â |
 |
Rates, News & Advice Articles
June 13, 2011
The stock market tried to mount a rally on Monday, but finished the day relatively flat, a growing signal that the pessimism in the market may be around to stay for the summer. The DOW was up almost 100 points in early trading action as investors were looking to buy into some bargains from the sell...
QRM Yet Another Federal Blunder In Fixing The Housing Market
QRM – Qualified Residential Mortgages is probably the dumbest idea the government has rolled out in the past 24 hours. An idea whose origination stems from the colossal collapse of the economy and U.S. housing markets would ensure the collapse of the American Real Estate Market. The simple economics...
June 4, 2011
The continued decline in stock prices, weakness in housing and the employment markets over the past sixty days has very few silver linings. The one area that has benefitted from the market changes is the mortgage market, where fixed home mortgage rates have continued to improve. Loan rates dropped to...
May 26, 2011
May has been a great month for the mortgage market as long term interest rates have moves substantially lower this month following a dip in bond yields. The ten year treasury bond move below 3.1 this week, over seventy basis points off of its high levels of the year. The correlation to fixed mortgage...