Conventional Mortgage
September 11, 2009 in Mortgages & Credit
A conventional mortgage is a housing loan that is generally on a fixed
interest rate term (although it can be an adjustable rate which is relatively new) and which generally meets the Fannie Mae (Federal National Mortgage Association) or Freddie Mac criteria and guidelines. They can also be called conforming loans, as they conform to conventional guidelines set out by the aforementioned institutions. Conventional mortgages usually do not go over the appraised worth or purchase price of the property by 75%, whichever is the least of the two. It is also the norm for a conventional mortgage to be a long term loan of thirty years since buying a home is considered a lifetime investment.
The conventional mortgage gets its name because it is the most common form of financing the purchase of a house and is “conventional,” i.e. not insured or guaranteed by the HUD, Veterans’ Administration or the Federal Housing Agency (FHA), which would make it a governmental loan or mortgage, although it can sometimes be privately insured for added security.
