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 term ad valorem comes from Latin, and its literal translation is “according to value”, which makes the ad valorem tax definition easy to understand. Defining ad valorem tax ...
Site where mobile homes are located. Mobile home parks are often mandated by municipal zoning laws. They provide necessary utilities to the mobile homes often including recreational ...
Generation X, also known as Gen X , is the generational extract of Americans that are sandwiched between the Baby Boomer Generation and the Millennial generation (also called ...
Land parcel bounded by two intersecting roadways. ...
An asset. The term cost is often used when referring to the valuation of acquired property. When it is used in this sense, a cost is an asset. Concepts of cost and expense are often ...
Unanticipated damages incurred as the result of the sub effects of a parties breach of responsibility or contract. Consequential damages often result in financial compensation. ...
Rooflike cover that extends over any place to provide shelter from the sun, rain, or wind. ...
Real estate property incentive offered for reasons other than individual merit. A discriminatory inducement is an effort to get an individual to buy or sell, rent, or lease real estate ...
Condemnation is a process by which private property is taken for the purpose of public use. Prior to the taking, the property is said to be “condemned property”, meaning that it has ...
Have a question or comment?
We're here to help.