What You Need To Know About a Conventional Loan And Reverse Mortgage
A conventional loan is a regular standard mortgage loan which is not guaranteed by the government of USA. Fixed terms and rates are applicable to this type of loan. As a home buyer in the United States, you should make an informed choice while buying a house and this is possible when you will know in detail about the type of loan existed in the country. We are a California based mortgage expert company specialized in several types of loans available in the country. We can best guide you to procure a loan according to your specific financial requirements.
Conventional Mortgage Loan
The conventional loan requires you to pay fixed monthly installments based on the home value you have purchased. This is a process of down payment that allows you to pay off your debt over time. The interest rates are usually higher than government loans. The duration of a conventional loan may be varied from 10 to 30 years.
The conventional mortgage comes with a fixed rate so it cannot alter the duration of the payment period. It is considered as a safe option for individuals as the monthly principal and interest rate will be the same for the entire duration of the loan. This helps those borrowers who are planning to stay their homes for many years to come.
It is preferred because
· As it will be a fixed rate mortgage, you will be saved from the fluctuating interest rates in the market.
· The annual percentage rate and interest rates are low with conventional loan compared to other types of fixed loans
· The conventional loan requires less documentation compared to other types of loans such as VA loan or FHA loan. So it will have a faster processing time.
· Refinancing options are available with a conventional loan which you can consider after living in the home for several years. Through this practice, you can refinance your existing home for a period of 15 to 20 years.
The conventional loan limits
They are usually more or less same in most of the states. The conventional loan limits is generally up to $484,350 including California. This rate is still applicable in the year 2019 for a single-family home.
Have you heard about a reverse mortgage?
This is another form of refinancing your home. With this option, you can earn cash out of your home. To be eligible for this, you should be of 62 years old and should have paid almost all your mortgage. One big difference between a conventional mortgage and a reverse mortgage is that the later does not require monthly repayments.
How it works
The practice of reverse mortgages is different from a conventional mortgage. Under this facility, you already own your home but due to the equity deposited over the years, you can ask for cash out of them. However you must pay the remaining loan amount in your lifetime and in absence of you, your family remembers will require to bear the burden of the loan. Even if you sell the house, you must pay the remaining loan.
Reverse mortgages are ideal for older individuals who want to avail their home equity to utilize in their personal requirements. There is no monthly payment option with a reverse mortgage. The interest rates and fees will be added to your loan amount every month. This makes your home equity to become less over time as your loan amount will increase.
You can use this option if you want to purchase a new home. Of course, you will need to pay higher installments but not monthly the way you pay your conventional loan installments.
Home buying is a serious investment and knowing about different loans will help you to make the most out of your loan. Contact us 310-702-5604 if you want to avail a conventional loan or want to explore various other loan options. Our expert mortgage specialist Rob Tennyson will help you with all the information and necessary formalities required to be done in the process of obtaining a home loan.