Conventional Mortgages are typically loans that are NOT insured by any government agency. These loans have more restrictive qualifying guidelines than government insured loans. Depending on the down payment, conventional loans may require private mortgage insurance (PMI).
Conventional Mortgages can have a fixed interest rate or an adjustable interest rate. Envoy offers Fixed and Adjustable-Rate Mortgages (ARM). These loans have an interest rate that stays constant for a fixed term and then fluctuates annually based on market conditions. Envoy Mortgage offers a 10/1 ARM, 7/1 ARM, 5/1 ARM and 3/1 ARM.
An ARM typically has a lower interest rate than a Fixed-Rate Mortgage for the initial fixed-rate period. However, at the end of the initial fixed-rate period, the interest rate becomes variable and may move up or down depending on the direction of the mortgage index it is associated with. All ARM programs come with a pre-set margin and are tied to a major mortgage index, such as the LIBOR. ARMs carry risk as the interest rate and monthly mortgage payments can change sharply.
A Conventional Mortgage can also be considered to be Conforming or Non-Conforming. Fannie Mae and Freddie Mac determine this primarily by the loan amount. Conforming loan limits in some High Cost areas of the country are higher and considered a HIGH BALANCE Conforming loan amount in certain areas. Those High Balance limits are temporary for High Cost areas of the country until further notice. Loans above those Conforming and High Balance loan limits are all considered to be Jumbo Loan amounts and subject to different guidelines as they are not salable to Fannie Mae or Freddie Mac. These Jumbo loans are considered a higher risk and are offered at a higher interest rate than conforming loan amounts.
Conventional Mortgages offer the following benefits:
- No private mortgage insurance is required with a sufficient down payment, which is a great advantage.*
- On loans that require Private Mortgage Insurance (PMI), the PMI is temporary and can eventually be removed from the loan without having to refinance the loan.*
- Lower fees and closing costs.*
- Repayment terms are generally more favorable.*
- Fewer underwriting hurdles, making the loans quicker to process.*
- Down Payment Assistance programs are available with most conventional loans.*
*RESTRICTIONS APPLY. For More Information on Conventional Mortgages, please contact Doug Bullwinkel at (800) 636-8910 or by email at: dbullwinkel@EnvoyMortgage.com