Conventional, fixed-rate loans have been the most popular type of loan for the past 30 years. They are a great option for anyone who wants to save money and get a good deal. If you qualify, conventional loans offer several benefits.
The Best Benefits of a Conventional Loan: A Quick Guide
- Transparency. With a conventional loan, you can plan out your monthly payments and know exactly what they will be. Conventional loans are based on the Consumer Price Index (CPI) to ensure affordability. That means as the cost of living rises; your payments will also increase.
- Stability. Conventional loans are relatively stable, making them ideal for borrowers looking for predictable payments. They, too, will be adjusted according to the CPI. One reason they are more stable than FHA loans is that conventional loans have no risk-sharing between the lender and the borrower.
- Security. Conventional loans are not insured, so if you owe more on the loan than the value of your house, the lender is still protected. Although making payments on an unsecured loan can be nerve-wracking, conventional loans are considered safer than other loan types.
- Lender-Friendly. Conventional loans are excellent for lenders, allowing them to make a healthy profit. These loans also allow lenders to offer more flexible repayment options, like reduced payments, shorter terms, and interest-only payments.
- Liberal Borrowing Standards. Conventional loans are a bit more flexible than federal loans. They allow you to borrow more money, whereas FHA loans are tied to a ratio that caps how much you can borrow in relation to your income. Conventional loans also don’t require a down payment, but the more money you pay upfront, the better your interest rate will be.
- Supplemental Financing. Conventional loans are great for people with a solid credit history who can borrow money through multiple loans. Borrowers can fill in the gaps between interest rates and fees as long as their credit history is solid.
- Lower Interest Rates. Interest rates are usually lower on a conventional loan, especially when the rate is fixed. Many lenders also offer interest rate discounts for borrowers with higher credit scores.
- Save Money. Conventional fixed-rate loans help you save money over 30 years because your interest rate is fixed, and your monthly payment remains consistent.
- May Be Used for Different Types of Homes. Conventional loans aren’t just available to homes. They can also be used to buy a house that’s been converted into a multi-family dwelling. They can also be used to purchase a house that’s been converted into a business office.
- Can Be Used for Investment Properties. Conventional loans can be used to purchase an income-producing property. This includes apartments, duplexes, triplexes, and quadruplexes.
Your Loan Team at America’s Mortgage Solutions
Conventional loans are ideal for anyone seeking stability. They’re great for anyone who wants to plan out their monthly payments. Conventional loans are also a good option for someone with a solid credit history. If you are ready to take out a home loan, speaking to a mortgage specialist will be the best first step to take.
If you are in search of a mortgage company in North Palm Beach, contact America’s Mortgage Solutions today at (561) 316-6800. As your home loan experts in North Palm Beach, FL, we are dedicated to ensuring your home purchase or refinance experience is smooth, seamless, and stress-free.
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