Conventional Loan

San Diego MortgageSan Diego Mortgage | Traditional Loans

If You are buying a home with a down payment of 20% or more, then it’s likely Your San Diego Mortgage will be a Conventional Loan.  Conventional Home loans are somewhat “old-fashioned” in that they are dictated more by the Market and less by Government guarantees or insurance.  However, the main supplier of Funds on the secondary market for Conventional Loans are pseudo Government entities Fannie Mae and Freddie Mac.

The Biggest difference with Conventional Loans vs. an FHA Loan or VA Loan is the lack of flexibility in qualification.  Fannie Mae and Freddie Mac have created an Automated Underwriting program called “Desktop Underwriter” (DU).  If a Private Lender enters all of Your personal financial information to DU and it spits-out an Approval, then You’re good to go!  However, if it does not give You an Approval, then that’s the end of the story.  There is almost no room at all to get a Manual Approval through traditional HUMAN interaction.

ADVANTAGES of a Conventional Loan:
#1 – More qualified Borrowers are able to achieve the lowest possible rates and payments.
Higher credit scores, lower debt obligations, and higher down payments or lower “Loan-to-Value” ratios will help You get the best possible terms on Your San Diego Mortgage.

#2 – If You are able to put at least 20% down when purchasing a home, You can avoid Mortgage Insurance completely.

#3 – There is no Funding Fee or Up front Mortgage Insurance Premium like with VA Loans and FHA Loans respectively.

DRAW-BACKS of Conventional Loans:
#1 – Qualification is more difficult.
Lower credit scores, income and down payment will make it difficult if not impossible to qualify for a Conventional Loan.

#2 – Less flexibility.
If something goes wrong along the way, or at the 11th hour like it always seems to, “making it happen” with a Conventional Loan in place is going to be much less likely than other loan types.

The Bottom line with Conventional loans is pretty simple.  If You have 20% down on Purchasing a home or 20% equity when Refinancing a Mortgage in San Diego, then a Conventional loan could be for You.  Email me below if You have questions and I’ll help any way I can.

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