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
The definition of the Environmental Protection Agency can be explained by what the agency does. This independent executive agency works for the United States federal government and is ...
The Real Estate Settlement Procedure Act (RESPA) is a piece of law passed by the US Congress in 1974 to protect homebuyers and home sellers against bad settlement practices. The Real ...
Kind of siding for wood frame houses where the joints in the usually vertical siding are covered by narrow strips of wood called battens. The battens are nailed over the joints. ...
When a mortgage loan is provided to a borrower, the lender establishes a fund called a tax and insurance escrow to accumulate the debtor's monthly payments for property taxes and insurance ...
Legal order for a person to present at a deposition or trial documents in his possession, such as related to a real estate transaction. ...
The smallest lot area required for building under the municipal zoning code. For example, a municipal zoning code requires all building lots to have a minimum lot area of 1/4 of an acre in ...
Heating system hidden behind special panels, the walls, or the ceiling. Can use electric heating elements, hot air, or hot water pipes. ...
The definition of low-income housing is any house that is either rented or owned by an individual or family that has a monthly household income that does not exceed a certain percentage of ...
The slope of surface inclination normally expressed as a percentage. The gradient is determined by dividing the surface change by the length of the surface ...
Have a question or comment?
We're here to help.