Conventional Loans

Conventional Loans

Conventional loans are mortgage loans that are purchased by Fannie Mae or Freddie Mac. While many think that a minimum 20% down payment is required for all conventional loans, we offer a minimum 3% down payment as well as many other low down payment options. Conventional loans are the ‘go-to’ loan programs. The most popular loan program by far is the 30 year fixed. Adjustable rate mortgages are also offered and offer benefits of lower introductory rates.

Underwriting can be easier on Conventional loans because automated underwriting engines are used. What is an automated underwriting engine you ask? It is a system that analyzes your credit profile, income, and other factors to approve the loan. Fannie Mae and Freddie Mac each offer an automated underwriting engine. Knowing your loan is approved on the front end really makes the entire process more streamlined. Underwriting is easier using these automated engines in regards to your credit scores and debt to income ratio. We do the work to get your loan approved so you can close very quickly!

Here are some examples of how Conventional loans can be easier in regards to underwriting. Jumbo loans have the mandate that your debt to income ratio cannot exceed 43% but the Conventional automated engines sometimes allow for higher debt to income ratios if you have excellent credit scores. So the debt to income ratio is much easier on Conventional loans than Jumbo loans. It is common that the automated underwriting engines only ask for proof you have received income once. An example of this is if you are newly retired you only have to document you have received that income once. This can make for much less paperwork and less hassles. Conventional loans are also easier on Second Homes and Investment properties.

So who are Fannie Mae and Freddie Mac? Here is an example. Fannie Mae buys loans from mortgage lenders so those lenders can fund new loans. Fannie Mae then pools those loans together and sells them to large investors as a mortgage backed security. A conventional, or conforming, mortgage adheres to the guidelines set by Fannie Mae and Freddie Mac. So lenders follow the Fannie Mae or Freddie Mac guidelines so they know they can sell that loan after it closes. Even though Fannie Mae owns your loan you will have a different mortgage servicing company. The Federal Housing Financial Agency regulates Fannie Mae and Freddie Mac.

Did you know Fannie Mae was created by President Franklin D. Roosevelt as part of the New Deal. Fannie Mae is the Federal National Mortgage Association (FNMA). It was created in 1938 with the purpose of purchasing mortgages from cash strapped companies so more capital would be available. The hope was this would encourage lending during the Great Depression.

 

Licensing

Chad Noble -Mortgage Lender
NMLS 488846

Cornerstone Home Lending, Inc.
Company NMLS 2258

nmlsconsumeraccess.org

Equal Housing Lender

Contact Us

Chad Noble - Your Summit County Mortgage Lender
409 E Main St
Frisco, CO 80443
(970) 390-4084