Contrary to low lending limits of government-insured loans, the Conventional loan serves to provide home buyers who have strong credit with versatile lending limits and lower interest rates.
These loans are offered by two private corporations – Fannie Mae (Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Corporation). Created in 1938 and 1970 respectively, Fannie and Freddie strive to resolve loan issues for buyers and lenders in the housing market. They purchase mortgages from banks, rendering the banks capable to provide to vast amounts of money for home loans.
At e-Finance Mortgage LLC, we have the privilege of providing stellar conventional loan options to buyers throughout California. Buyers can benefit from loans relevant to purchasing and refinancing mortgage loans.
Conforming and Non-Conforming
Though it is generally assumed that conventional loans are conforming, they are actually categorized as both conforming and non-conforming.
A conforming loan is restricted by Fannie Mae’s or Freddie Mac’s limitations. These entities consider a conventional loan eligible if it meets their lending guidelines.
Since a non-conforming loan does not meet these guidelines, it is not considered eligible. For instance, conventional loans that exceed $424,100 are referred to as “jumbo loans”. Jumbo loans may not be approved by offering entities.
However, conventional loan limits for high-cost areas of California may be extended to $636,150 (conditions apply).
CA Conventional Loan Options
There are two primary options for conventional loans, fixed-rate mortgage and adjustable-rate mortgage, as well as a hybrid option in certain cases. Choosing the option depends on a borrower’s monetary and property goals.
For the Fixed-rate Mortgage (FRM), the mortgage amount is unvarying throughout the duration of the loan, unaffected by any fluctuations in market rates. FRM loan duration options include 15-year, 20-year and 30-year time span.
For the Adjustable-rate Mortgage (ARM), interest rate not only varies according to market fluctuations but may also be considerably lower than FRM, or any other loan types.
CA Conventional Loan Requirements
In California, buyers are required by the loaning entities to fulfill 20% of purchase price as down payment. This minimum has been lowered to 3% (for certain areas) due to the housing crisis in the past few years.
Borrowers who make the 20% or more down payment do not have to worry about private mortgage insurance (PMI). However, those who choose to make less than 20% down payment have to fulfill these mortgages till 20% property equity.
e-Finance Mortgage LLC is provides both purchasing loans for new homebuyers and re-financing for existing homeowners in California. Our conventional loan rates and terms are unmatched, and our loan specialists offer complete guidance in loan applications.
Contact us today to find out more about our conventional loan options!