An Arizona conventional loan is a mortgage loan which is not secured or offered by government entities but by private lenders such as mortgage companies, credit unions, and banks. These loans are also guaranteed or available through the government-sponsored entities, Freddie Mac and Fannie Mae.
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Within this class of loan includes the following mortgage programs:
- Jumbo/construction loans
- Reverse mortgage
- Balloon mortgages and pledge asset loans
- Fixed-rate loans
Conventional loans can be any home mortgage that is required to comply with Freddie Mac and Fannie Mae’s underwriting requirements and loan limits. Presently, in the U.S., conventional loans represent two-thirds of all homebuyer’s loans. This implies that Freddie Mac and Fannie Mae purchase or guarantee around 35-50% of all the mortgages. These were the very first traditional mortgage loans that were offered by lenders and local banks and could be adjustable-rate or fixed-rate mortgages.
Categories of Conventional Loans
There are two main categories of conventional loans in Arizona. These include:
- Conforming mortgages that follow the Freddie Mac and Fannie Mae’s guidelines
- Non-conforming mortgages which surpass the amount allowed to be backed by Freddie Mac or Fannie Mae.
It is important to note that although all conforming loans are conventional, not all traditional loans are eligible as conforming. For instance, a balloon mortgage requires regular payments for a particular interval. At the end of the term of, the borrower will pay off the balance remaining within a short period. For more information on the conventional loans, reach our Arizona experts today.
Get more information by reaching our Home Loan Specialists at (855) 501-5927 or by sending us a message online.