Many home loans today such as FHA loans, VA loans, and USDA loans are guaranteed by government agencies. Loans backed by such agencies are often designed for the borrower with less than average credit score or limited cash available for a down payment. There are also limits on the size of the loan that can be insured. A conventional loan is any home loan not insured by one of these government agencies. Conventional loans can be a valuable option for borrowers with stronger credit and income or for those who want to purchase homes that exceed the limits available for government-backed loans. e-Finance Mortgage LLC offers great rates and terms on conventional loan options to homebuyers throughout Colorado.
A conventional mortgage can be classified as either a conforming or non-conforming loan. To be considered a Colorado conforming loan, the mortgage must meet certain criteria set in place by Fannie Mae or Freddie Mac. If the loan meets the requirements, it is considered conforming and eligible for purchase by Fannie Mae or Freddie Mac. Non-conforming loans on the other hand are mortgages that do not meet the requirements to be eligible for purchase by these entities. The size of the loan is the first thing that is looked at when determining eligibility. Loans greater than $424,100 are not eligible for purchase. In certain high-cost areas, this limit is increased and loans can reach as high as $636,150 while still being considered conforming.
Down payments of 20% or more have traditionally been required for Colorado conventional loans. In recent years, Colorado conventional loans are becoming increasingly available with down payments as low as 3%. A 20% down payment allows buyers to avoid private mortgage insurance (PMI). Buyers who choose a lower down payment option may still need to pay PMI with their loan however, mortgage insurance can be cancelled once 20% equity is reached. This option is not available for government-backed loans such as FHA loans.
Colorado Fixed and Adjustable-Rate Conventional Loan Options
Conventional can be found with fixed-rate, adjustable-rate, and hybrid options that combine components of both. Each type of rate has unique benefits depending a borrower’s situation and goals.
Many homeowners prefer fixed-rate mortgages as they offer stability and peace of mind. The rate on your fixed-rate mortgage will remain constant for the life of the mortgage regardless of rate fluctuation in the market. Fixed-rate mortgages are most commonly available as 15-year, 20-year, or 30-year loans.
If you choose to go with an ARM, the interest rate on your mortgage will vary from time to time depending on market conditions. One advantage of ARMs is that they typically start out with lower rates than fixed-rate mortgages. Buyers with plans to relocate or refinance in the near future may find that an ARM is the most valuable option for their needs.
e-Finance Mortgage LLC offers some of the lowest rates and most flexible terms on Colorado conventional loan options. Whether you are purchasing your very first Colorado home, or refinancing your existing mortgage, we can tailor a conventional loan to meet your exact needs. For more information on our conventional loan products, contact us today.