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
A public officer given the right to authenticate a document, accept a person's oath, administer depositions, and to conduct other activities in commercial business. An official seal is used ...
Statement made verbally. It is better legally to have a written statement because verbal ones without witnesses may be denied. ...
Same as term yield: The income earned on an investment, typically stated as a percentage of the market price ...
Reconsideration of the value of real property. An example is getting property appraised each year to determine its current value for tax or purposes of determining whether to sell ...
Giving of a promise or guarantee to the receiver to instill confidence. ...
Amount of money paid for some form of property. In real estate, the price paid for property is usually the market price; however, in the case of a forced sale, as in a foreclosure sale, the ...
Amount of money that must be charged or invested in the initial stage of a business transaction to demonstrate good faith as well as to help offset some expenses. For example, the customary ...
Refurbishing or rebuilding a property, such as a house, back to its original or earlier condition. ...
The units are used as commercial offices. The purchaser of an office condominium owns the title to the individual office unit and not to the property. Maintenance fees are assessed to each ...
Have a question or comment?
We're here to help.