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When A Conventional Mortgage Is Your Best Option

Veterans Home Loan copy

Buying a new home should be an exciting, heart-warming time. After all, you’re not just choosing somewhere to live, you’re choosing somewhere to make memories with family and friends. It may be where you watch your kids or grandkids grow up, or it may be your first foray into true adulthood. Either way, a home is so much more than four walls and a roof over your head. Unfortunately, the process of finding a lender and getting approved for a mortgage loan can be a daunting one — and that can suck a lot of the excitement from the process if you don’t know where to start.


Working with a mortgage broker is a great option to find mortgage financing, especially if you’re not quite sure which option is the best match for your needs. Mortgage brokers, like the team at Patriot Home Mortgage, work with a range of lenders, so we can help you find the best match for your specific financial situation, rather than trying to shoehorn you into one of only a few options. In addition, it can be helpful to learn about the different types of mortgages out there, and the differences therein. For example, one of the more common options, the conventional mortgage, can be an excellent money-saving option or a less-than-stellar one. It all depends on your financial situation.


What It Is

In the simplest terms, a conventional mortgage is any home loan that isn’t backed or guaranteed by a government entity. Options like the FHA mortgage, USDA mortgage, and even VA home loans are all backed in some way by a government entity, which means those loans have to meet certain criteria set forth by the backing entity. Conventional mortgages, on the other hand, tend to come with fewer industry-wide restrictions or qualifiers. They are offered by banks and other financial institutions, so the eligibility requirements will depend on what that particular institution decides the requirements are.


That being said, conventional mortgage options fall into one of two categories: conforming and non-conforming. Conforming conventional mortgages are those that stick to the eligibility standards as determined by the government sponsored institutions Fannie Mae and Freddie Mac. The non-conforming conventional mortgages are options like a jumbo mortgage, which provides larger than average loan amounts for those who can afford a larger, more costly home.


The Benefits

The primary benefit of choosing to go the conventional mortgage route is that of flexibility. The conventional loan options at one institution may be entirely different from the bank across the street. For the diligent mortgage shopper, conventional mortgages mean there’s a better chance to find the right loan to fit your financial needs — which often means things like a lower interest rate, no mortgage insurance requirement, and lower monthly payments for the life of the loan.


Conventional mortgages can also be the better option for those who need a loan to be processed more quickly. Since the mortgage approval process is done by the lender (with or without the help of a mortgage broker), and doesn’t need to abide by governmental criteria, it can often be processed and approved more quickly.


Applying For A Conventional Mortgage

The first step in applying for a conventional mortgage should always be shopping around to learn about the variety of different options available that fit your financial situation. You can undertake this on your own, but a mortgage broker is often a faster and more in-depth way to do so. Mortgage brokers work with a wide range of different lenders, so we can often narrow down to a few of the best options quickly and easily. The other important thing to remember is that mortgage brokers can provide you with valuable education throughout the process. We know a wide range about a variety of different loans and lenders, so we can explain to you why one choice is more beneficial for your specific needs than another.


Before submitting your mortgage application, it’s also important to get your financial information together. Taking a few months to improve your credit score, pay down debt, and save up a larger down payment can make a huge difference in monthly payments — which can result in years of savings. Want to learn more? Contact the team of specialists at Patriot Home Mortgage to learn more and get help finding and applying for the best mortgage for you!

How Does a Veterans Home Loan Work?

Veterans Home Loan

For those who have served in our nation’s armed forces, veterans home loans, or VA loans, are one of the myriad benefits out there to provide support after separating or retiring — or even while still active duty. Considering how frequently the U.S. government asks you to uproot your family and move across the country or the globe, it stands to reason that they’d help you find ways to come home in the end. Veterans home loans are guaranteed by the U.S. Department of Veterans Affairs, but the funds are not directly disbursed by the VA. Whether you are currently serving or have been separated for years, a veterans home loan can be a great option to for mortgage financing for those who are eligible. Here’s what you need to know about how a veterans home loan works:


Eligibility & Qualifying

The primary VA home loan eligibility factor is your service time. Active duty service members typically qualify after six months of service, while reservists and National Guard members have to wait six years; however, if reservists or National Guard members are called to active duty, they gain VA home loan eligibility after six months. During war periods, active duty, reservists, and National Guard gain eligibility after 90 days. In addition, the benefits can also extend to spouses. However, VA loan eligibility for spouses only extends to those whose spouses died while active duty or died as a result of service-related disability — and that’s only for spouses of veterans who have not remarried.


If you meet the initial eligibility requirement, the other important factors are going to be more financially-based. Since veterans home loans are guaranteed, at least in part, by the VA, the eligibility requirements are less stringent than other loans. The loans themselves are made through private lenders, so they don’t necessarily need to match up to the requirements of a “conforming” conventional loan. Essentially, this means VA loan eligibility has more flexibility to work with veterans based on their needs.



Credit Score

In terms of perks, the veterans home loan has some pretty comparatively great benefits. For example, where a conventional home loan has a minimum credit score requirement, VA loan benefits mean more broad availability specifically because there is no minimum credit score needed. Of course, the better your credit score, the better your interest rate is likely to be, but veterans home loans are designed to be more flexible.


Down Payment Requirement

Another of the biggest benefits of veterans home loans speaks to a major concern for first-time home buyers in particular. One of the biggest VA loan benefits is that there is no down payment minimum. In theory, you could be approved for a VA house loan with $500 to put down, or with nothing at all! However, the caveat to this is that, just like with raising your credit score, a larger down payment can help you get a better interest rate and keep your monthly payments lower. Also, there is a one-time funding fee that is affected by how much of a down payment you are able to put down.


Mortgage Insurance

Going along with the low-to-no down payment requirement, another upside to veterans home loans is that they do not require mortgage insurance. Many types of mortgages require mortgage insurance if your down payment is below a given threshold. It’s a way to ensure that the lending institution is compensated in the event that a borrower defaults on their mortgage. It translates to a higher monthly payment for the borrower. Since one of the VA loan benefits is no mortgage insurance, that typically translates to lower monthly payments.


VA Loan Assistance

Since there is no mortgage insurance, there is often a question of what happens if a borrower can’t make payments. Since the loan is guaranteed by the VA, they have trained staff designated to help negotiate with lenders on behalf of the borrower. They can help develop payment plans, work to modify loans, or find other measures to help prevent foreclosure.


Finding Veterans Home Loans

There are a wealth of different veterans home loans options out there, since they are offered through private lenders. Get help finding the right loan for you. Work with the Patriot Home Mortgage team to learn more and get started on financing your next home!

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What is the difference between APR and the Interest Rate? Watch the President and CEO of Patriot Home Mortgage explain the difference between APR and the Interest Rate in this Video:

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