Conventional Mortgage
Definition of "Conventional mortgage"
A mortgage requiring a substantial down payment. It is usually only available to those having good credit, and has fixed monthly payments for the life of the loan. It usually has a 30 year period of fixed interest rates discharged on an amortized basis with equal monthly payments. The term conventional refers to a mortgage that is not FHA-insured or VA-guaranteed. Since there is no third person or entity to insure or guarantee the mortgage, the lender assumes full risk of default by the borrower. A lenders decision to make a conventional mortgage is usually dependent upon: (1) the value of the property being used to secure the debt and (2) the credit and income position of the borrower. As more and more conventional mortgages have been made, the loan to value ratio (relationship between the amount borrowed and the appraised value of the property) has continued to increase, even though most lenders still limit the amount they will lend to no more than 80% of value unless private mortgage insurance is carried. This down payment required is higher than with either VA or FHA loans. As the market price of residential real estate has continued to increase, a larger cash down payment has been required of the borrower, and thus many people have been eliminated from financing with a conventional mortgage. With both guaranteed and insured mortgages, people have been able to purchase real estate with a smaller cash down payment.
Popular Real Estate Terms
Early American frontier-style house constructed of logs. Since finished lumber was not readily available during the early frontier period of American history, homes were often fashioned out ...
The number of units currently occupied in a facility, neighborhood, or city, stated as a percentage of total capacity. For example, a hotel has 80 rooms available for guests. Its average ...
The Women’s Council of REALTORS® is one of the affiliate organizations of the National Association of REALTORS® (NAR). This nonprofit organization is a network of successful ...
Under law, a warranty in effect even if not expressly stated. It provides that real property sold is warranted to be appropriate for sale and is in proper condition even if not stated, ...
Existing state of affairs with respect to the real estate market and conditions. ...
payment of a debt before its due such as a mortgage payment or insurance premiums. ...
One-story house with a low pitched roof often having an open floor plan. ...
What’s the definition of real estate collateral? Could we say it’s like keeping a hostage? No, that would be relatively insensitive. But the idea is similar. In real estate, ...
Are you looking to sell your house or buy a new one? Then, you'll most assuredly encounter the term instrument at some point. If you don't want to ask people: "Please, define instrument to ...
Have a question or comment?
We're here to help.