Odessa Conventional Home Loans

Borrowers have several options for financing the purchase of a new home. How good (or not-so-good) your options are, depends on factors that affect your financial health, such as income, debt, credit history, and other things. And though more home loan options are available now, the conventional loan is still the most popular mortgage product in the market. 

What is A Conventional Loan?

A conventional loan is any mortgage loan not backed by the government (i.e., FHA, VA, or USDA). The majority of conventional loans today are “conforming loans” because they adhere to the guidelines established by Fannie Mae or Freddie Mac – agencies that standardize mortgages in the United States. 

The maximum conforming loan amount for 2022 is $647,200 for most areas in the country and $970,800 for high-cost regions.

The Advantages of Getting a Conventional Loan

Conventional loans have several advantageous features that make them an excellent option for many borrowers, particularly first-time homebuyers with good credit, a down payment fund, and low default risk. These features include:

• Lower interest rates
• Faster loan processing
• Multiple options for the down payment
• Low mortgage insurance premiums
• No PMI required for down payments of at least 20%

Qualifying for a Conventional Loan in Odessa, TX

Unlike government loans, which pay back the lender if the buyer stops making their mortgage payments, conventional loans don’t have this built-in guarantee. Because they pose a greater risk to the lender, conventional loans have stricter eligibility requirements. However, don’t let this deter you from qualifying for a conventional mortgage. A lot of homebuyers were granted a conventional home loan. You can be, too, as long as you have the following:

• Good credit rating
• Sufficient income and savings
• Stable employment
• Debt that is less than 50% of gross monthly income (including projected house payments) 

To find out whether or not you are qualified for a conventional home loan in Odessa, TX, pre-qualify with Capital Home Mortgage today!

Adjustable-Rate vs. Fixed-Rate Mortgages

The interest rate on a fixed-rate loan remains the same for the duration, typically 15 or 30 years. With a fixed-rate mortgage, you’ll always know how much money to put aside monthly for mortgage payments. Moreover, you need not worry about your payment amount increasing even if interest rates do. Fixed-rate mortgages usually have a slightly higher interest rate than adjustable-rate mortgages because they offer more security. 

An adjustable-rate mortgage is a loan that starts with a low fixed interest rate for a certain amount of time (anywhere from 1 to 10 years) and then changes periodically to reflect changes in market interest rates. When your loan adjusts, your monthly payment could either increase or decrease based on market interest rates. If the interest rates go up, so does your monthly mortgage payment, which is a gamble many people are unwilling to take.

Should You Get a Conventional Loan?

Conventional home loans can be a great option for borrowers with excellent credit, a solid financial background, and adequate down payment funds. However, failing to fulfill the following requirements might fare better with other mortgage options. Some loan programs, like the FHA loan, are designed to help first-time homebuyers save time and money during the home-buying process.

Capital Home Mortgage is a direct mortgage lender that works with borrowers at all stages of the home-buying process, from first-timers to those looking to refinance. Contact us at (432) 218-4828 if you want to know more about conventional home loans. We’ll gladly answer all your questions and help you throughout the process – from application to closing.