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
What a piece of property could be sold for on the market. ...
Credit note which a lender's only security is the borrower's personal financial situation and credit history. ...
the loan rate stated on the face of the loan note. The nominal loan rate is not the same as the effective interest rate. For example, if points are charged to secure a loan, the effective ...
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. ...
Window(s) situated on top of a structure to furnish air and light for the inside. ...
Those factors causing the movement of people, industry, and business from the central city to the outside central city areas, suburbs, and/or small cities. Elements of the dispersing force ...
Two-story house where the front door is located above the first floor but below the second floor. ...
Are you ready to unlock the secret to reaching your ideal audience? The key is market delineation! But what what does delineate mean? Join us on this real estate journey and uncover the ...
Mortgage for residential property. ...
Have a question or comment?
We're here to help.