8 Reasons Why You Should Choose a Conventional Home Mortgage (#2 is our FAVORITE)

Whether you’re looking to build a new home or refinance your existing one, you’re going to come across lots of different loan types in the process. The one I’d like to recommend is a conventional loan. You can even get a Conventional Loan right here in St. George, at Sun American Mortgage!

You’re probably wondering how getting a Conventional loan will benefit you, right? Well In this post, we feature many of the benefits a conventional can give you, as well as how you can get one!

What is a conventional loan?

A conventional loan refers to a loan type that is not backed by government agencies. The conventional home mortgage conforms to standards set by Fannie Mae and Freddie Mac, the largest buyers of mortgage loans here in the US. 

Conventional loans fall under two subcategories. These are conforming and non-conforming loans. Conforming loans follow the guidelines that are set by Fannie Mae and Freddie Mac. There are several kinds of non-conforming loans, the most common being jumbo loans, (because they are borrowing a loan amount higher than the limit set for that area) are for those that don’t qualify for a Conforming Loan.

Some examples of home loans backed by government agencies include an FHA (Federal Housing Administration) and the VA (Veteran home loan). A conventional loan can be a great low-cost option for first time home buyers who are looking for better alternatives. 

1. Enjoy as low as 3% down payment

A conventional loan is available at 3% down as opposed to the industry standard of 20%. Like I mentioned above, this is a huge reason why going with a conventional loan is a great option for first time home buyers. Some people can’t wait till they have that 20% saved up, so if you need to get into a home sooner than later, a conventional is your friend.

2. Avoid paying monthly mortgage insurance

One of my favorite features of conventional loans is that you don’t have to pay any monthly Mortgage Insurance. I do want to urge a caution of warning though, there is a slight catch. This benefit only applies if you put the standard 20% down. If your down payment is less than 20%, you’re still going to have to pay for monthly insurance. I’d still recommend getting a conventional loan, because let’s say you only put down 3% and get into your dream house. You’ll have to pay the monthly mortgage insurance until your loan to value ratio reaches 80%. If you are refinancing your already existing Mortgage, you can choose to go conventional and save some money. This means that if you have an FHA or VA loan, you can transition to conventional when you refinance & eliminate that pesky mortgage insurance.

3. The convenience and flexibility to be applied if building different property types

For most government-sponsored loans, they’re going to limit you to building only for a primary residence. If you’re interested in building a whole complex, investment property, or vacation home, The Conventional loan is  going to allow you to do that.  Government loans have different restrictions for those property types. Going Conventional gives you more freedom! Of course, you can still build a primary residence with a Conventional Loan, but for someone with an investment mindset and would like to earn some rental income from the property, a Conventional Loan is a solid option & worth pursuing.

4. Conventional loan borrowers can choose adjustable-rate or fixed-rate loans

Depending on the plans for the property, you can either be qualify for an adjustable rate, or fixed-rate loan. Many prefer to go for the fixed-rate option for the security of knowing your interest rate will be fixed for the life of the loan. The adjustable-rate option allows the you to enjoy a lower rate on a conventional loan for a time, but your payment may increase/decrease over the life of the loan.

5. We Close on-time

Here at Sun American Mortgage, we always close on time! So long as you’re meeting the requirements & there’s no hiccups that are out of our control, Conventional loans are processed faster compared to government-backed mortgages. 

Cons associated with applying for a conventional loan:

6. The terms and conditions are stricter compared to the FHA and VA home loan options.

Since they aren’t a government backed loan type, there are stricter guidelines to qualify. Fannie Mae & Freddie Mac decide how and when they like to lend their money and they choose to have guidelines that protect their investments. It makes sense why they need to be more careful, but it’s just something to keep in mind during the qualifying process! Just because this is the case, don’t let it scare you away though! Our team here at Sun American Mortgage will always explore all of your options to get you into your dream home. We’re all about helping families over here, & that’s a guarantee!

7. The decision on conventional loan qualification is entirely made by the lender.

I promise it’s not as scary as you think! It just means if you’ve had a recent foreclosure in the past, it may limit what your options are when qualifying for a home loan. But isn’t that the case with every loan? Our team is going to do everything in their power to get you in your dream home though & there’s a lot of options that can help in those situations.

8. If the borrower cannot afford the 20% down payment, they have to cope with the requirement to pay the mortgage insurance.

Like I mentioned in paragraph 2, this is my favorite thing about Conventional loans. Yes, you’ll need to have saved the industry standard of 20% to enjoy not paying Mortgage Insurance. But!! If you don’t have 20% to put down, you can still get a conventional loan & later refinance to get rid of that Mortgage Insurance.

Come talk to Sun American Mortgage in St. George (home loan) today for any of your Mortgage needs! We love helping families getting into the homes of their dreams! After all, were all about Changing Lives One Home at a Time.

Low Down Payment Options: What We Learned After Analyzing TONS of Mortgage Loans!

Saving enough money to afford a high down payment for a home purchase can take a long time. Luckily there is an option of mortgage loans with a low down payment, to no down payment. The typical required 20% down payment is outdated. New homebuyers have been taking the low down payment loans and the experience has been not just enjoyable, but a huge financial relief.

In this post, we share what we learned after analyzing the home loan options available at Sun American mortgage.

1. FHA Programs

FHA home loans are designed to favor the low to moderate-income earners, which allows new homebuyers to take advantage of the lenient credit score requirements. An FHA loan only requires a 3.5% down payment & has more flexible qualification guidelines.
If you can’t qualify for the traditional mortgage loan types, FHA is a good alternative, thanks to the FHA guarantee. At Sun American Mortgage, you can get approved for an FHA loan if you have a decent credit score with at least 600s and can afford a low down payment of 3%. Compare to a more traditional mortgage guideline, where the loan applicant is expected to reach a credit score of 700-plus and a high down payment of as much as 20%. So, if you are in search of the best low-down payment, FHA home loans have got you covered!

2. Rural USDA Home Loan

This type of loan is available to those looking to purchase a home in the rural or suburban areas. This loan is typically offered a little outside of the St. George area to be considered rural. It’s available at no down payment, hence a low investment mortgage. Backed by the U.S. Department of Agriculture, the loan is designed for aspiring homeowners who are looking to buy outside of a large urban area. It allows you to renovate, build, improve or relocate your primary residence, within the eligible rural areas. This type of loan is available for 30-year fixed rates only. We also give you flexible qualification guidelines, giving you access to 103.5% of the appraisal value. A USDA mortgage requires an upfront guarantee premium and low rate monthly mortgage Insurance. If you are wondering whether you can qualify for a USDA rural home loan, come talk to one of our friendly loan officers will help you through the loan application process.

3. Utah Housing Loan

The Utah housing loan gives loan applicants access to a zero-down payment, offering flexibility to qualified first-time homebuyers. If you are a first-time home buyer in Utah and you meet the income and other eligibility requirements, you can get approved for the Utah Housing loan. This option provides a 30-year mortgage at a competitive interest rate and is available at Sun American Mortgage! However, the loan applicant is expected to live in the home and cannot purchase it as a rental property. Also, the borrower’s credit score should reflect an ability to pay bills on time, with a score of at least 620.

4. Veterans Home loan

The Veterans Administration home mortgage allows qualified members to access affordable home financing. This loan gives home buyers access to a zero-down payment as well, offering flexibility to qualified first-time homebuyers, so long as the home buyer is a veteran or the spouse of a U.S Vet. If you are a veteran and first-time home buyer in Utah and you meet the income and other eligibility requirements, you can get approved for this loan. This option allows a 30 year mortgage at a competitive interest rate and is also available at Sun American Mortgage! Again, the home buyer is expected to live in the home & cannot purchase it as a rental. Credit scores need to be at least 620 to be eligible for this loan as well.

If you are curious whether you can qualify for any of the home loan types mentioned above, then feel free to come talk to one of our friendly loan officers today! We would be happy to answer any questions you may have & will help you through the loan application process in a breeze.