When times get tough, or you need to make a big purchase, what do you do? Normally you’d consider a loan, but loans these days aren’t as cut and dry as they used to be. How can you be sure you’re getting the loan you need? If you’re especially looking into a home, but have found that your credit or down payment isn’t what it should be, you might need to consider looking into the types of loans.
After all, there are conforming loans, non-conforming loans, FHA loans, fixed-rate loans, and the list goes on! Your best bet, for a standard home loan, is probably looking at a conforming loan, and the types of loans it covers. It’s time to think about conforming loans and you.
What is a Conforming Loan?
Most simply put, a conforming loan is a loan that complies with GSE guidelines. That means it’s one of the safest loans you can get in the United States. It is limited to the amount that can be loaned, and it does consider your financial aspects, but it is the most basic types of loans.
The GSE guidelines stand for Government Sponsored Enterprise, such as the Fannie Mae loaning company. They’re there to help keep the credit loaning business easier for the customers and less monopolized. These financial services are created by the government to help keep lending to a decent business that avoids such things as loan sharking.
This helps many people these days, since the GSE guidelines helped create a more uniform set of standards and documents to fill out. What does this mean for you? It’s more of one-size fits all, rather than only one piece fits in one spot. You can fill out documents for a loan, and should you decide to move onto another lender, won’t have to completely refill out a brand new document. You’ll also know exactly what to expect when you walk in, and shouldn’t be given any surprises because one company differs in their offers.
Fixed Rate Mortgage
One of the two types of loans that fall under the conforming loan umbrella is called a fixed rate mortgage. This “FRM” is one of the most basic loans for a homebuyer with a steady income and the ability to think ahead. It’s the most common mortgage you can get in the United States, and is offered in two general terms. The basis behind this conforming loan is that you’ll receive this loan with a fixed rate attached to it.
Your interest rate will not change for the full amount of time that’s been promised, and you’ll have a set schedule for your payments. Usually you can get a fixed rate mortgage in either a 15- or 30-year stretch. This allows you to know exactly what you’ll be paying every month until then, and it helps you promise a payoff at a specific point in time.
Adjustable Rate Mortgage
The other type is just what you’d think it is! It’s a variable rate, meaning that it doesn’t stay the same over the years. That can either be a good thing or a bad thing, depending on circumstances, so it’s not as popular with most first time buyers. These rates are changed based upon various indexes that can be checked upon depending on the company you’re loaning from and the country that you’re in. These indexes are not all used, so it benefits you to find out what index will be used to judge your new payments.
There is an initial rate, much like when they state you’ll pay $20 for the first 12 months of internet on a commercial. That’s the introduction, and at the end of the 12 months, or however long your adjustment period is, you’ll be reassessed and given a new monthly payment. This can help you in the long run, since paying on time can help prove to them you don’t need a high interest to keep paying.
Which is Right for You?
If you’re considering getting a loan, then you should consider Kloze. We offer the best mortgage rates in your area, and can provide you with specific details suited to your needs. While you may consider one type of conforming loan, we can offer one-on-one consultations to find out whether it is the best type of loan for you. We offer the best in customer service and rates, and will find suitable loans that won’t leave you in the cold or bury you under high interest. We do recommend a conforming loan, at least upon first glance, since it is one of the more regulated loans offered, and provides a standardized application to simplify things.
If you’re someone who prefers a predictable and steady rate, a fixed-rate conformed mortgage might be the better choice for you. You’ll know exactly what you’re expected to pay, and it won’t change unless you ask for a refinancing. Otherwise, if you’re hoping to pay things off quickly, or want to try and lower your interest over the years, you could apply for an adjustable-rate mortgage, and get your loan paid off faster the more you work on it.
Sound easy enough? With Kloze, it is. Contact us today, and get the information you need to afford the home you love. We’ll help you out from start to finish, and won’t surprise you with hidden fees or secrets. NHL Lending will help you learn about conforming loans and how you can use them to buy the house you’ve been dreaming of.