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Conventional Loans in Florida

Conventional Loans in Florida
April 8, 2020 admin
Conventional Loans

Today’s blog entry will be exploring one of the most common types of loans out there: the conventional loan. Due to their common place use, you’ve probably heard the term conventional loan thrown here or there, but what exactly are they? And how do they stack up against other loan options. This blog entry will be answering that and then some.


What Are Conventional Loans?


Conventional loans are a type of mortgage loan that aren’t insured or guaranteed by the government. Instead, these loans are backed by private lenders and paid by the borrower. Conventional loans tend to be more common than other government-backed loans. In fact, conventional loans were used for about 74% of all new home sales in the first quarter of 2018, making them a popular financing option. While conventional loans are flexible for buyers, they’re also rather risky due to them not being insured by the federal government.


What’s the Difference Between Conventional Loans and Other Loans?


Government backed loans such as VA and FHA loans are backed by their respective administrations, that being the Federal Housing Administration and the Veterans Administration. With FHA loans, you’re required to put at least 3.5% down and pay MIP (Mortgage Insurance Premium) as part of your monthly mortgage payment. The FHA uses money made from MIP to pay lenders if you default on your loan.

For VA loans, you must be a previous or current member of the U.S. Armed Forces or National Guard—or have an eligible surviving spouse. A VA loan requires no down payment, but you must pay a one-time funding fee, which usually ranges from 1%–3% of the loan amount.

Conventional loans on the other hand have a few risks, with the biggest one being that the lender is at risk, If you can’t make payments, the lender will try to recoup as much of the remaining balance as they can by selling your house through a short sale process or even foreclosure.


What are the benefits of Conventional Loans?


There’s a reason why conventional loans are a popular choice. These loans have several features that make it a great choice including:


  • Low interest rates
  • Fast loan processing
  • Diverse down payment options, starting as low as 3% of the home’s sale price
  • Various term lengths on a fixed-rate mortgage, ranging from 10 to 30 years
  • Reduced private mortgage insurance (PMI)


There’s definitely a lot to take in when it comes to conventional loans, but rest assured that this article is just one of the many steps you can take to further your knowledge when it comes to knowing about the world of mortgages and loans. We hope that you found this blog entry useful, and if you have any further questions about anything related to conventional loans, make sure to give the trustworthy team at Mortgages Done Right Inc. a call! Until next time, have a lovely rest of your day.

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