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
We know that the board of directors meaning defines a body of high executives who make significant daily decisions. But what is the definition of board of directors precisely? Typically, ...
What is a turnkey property? A turnkey property is a very popular type of investment property that real estate investors prefer because it starts bringing a return on investment quickly. ...
The amount of inherent risk for a mortgage in granting a mortgage. An operating principle in mortgage risk rating is that the mortgage cannot exceed 2.5 times the mortgagor's annual income, ...
An agreement by which a mortgage is made subject to a junior mortgage. For example, a loan on a vacant lot is made subject to a subsequent construction loan. ...
Those parts of a condominium that are owned by all the unit owners. ...
Across the globe, countries have comprehensive antitrust laws that protect customers and ensure the orderly conduct of businesses. Through antitrust laws, the playing field is balanced for ...
Real estate business owned by one person having all the rights and obligations. ...
As a legal term, abandonment defines a deliberate renunciation of rights to an asset or a business relationship. What does abandonment mean in real estate? In real estate, abandonment, ...
The label American Land Title Association, also known as ALTA, is a trade association that helps in managing the title insurance industry. Another focus of ALTA is the abstract of title of ...
Have a question or comment?
We're here to help.