Do you plan on buying a home this summer? Maybe you’ve found the right home but are now trying to decide which type of financing is right for you? A conventional home loan is a wise decision for Indianapolis home buyers, but how do you know if it’s right for you? Our team at GVC Mortgage is here to answer a few common questions to help you make the right decision.
What Is a Conventional Loan?
A conventional loan uses the property and home as collateral against defaulting, instead of being insured by the FHA or VA. With this type of loan, you qualify based on your credit score. So if you have poor credit, you definitely will not qualify. Because the government isn’t involved to provide insurance, the lender needs your credit score to be good enough to indicate that you’re trustworthy to repay.
What Are the Benefits?
While harder to obtain, conventional loan options offer more freedom than government-insured loans. FHA programs often have several rules and regulations that conventional loans do not. Additionally, most lenders don’t require mortgage insurance. And, you can expect fixed or adjustable interest rates.
What Are the Downsides?
A conventional home loan is a very wise decision because your mortgage payment will not be exposed to the risk of rising interest rates. However, the one downside is that you’ll be required to put down at least 10%, and usually 20%, as a down payment. Thus, it may take longer to save for your dream home. However, it will be worth it in the end, as you will get your mortgage paid off sooner and pay less interest.
Your best bet in determining whether a conventional home loan is right for you is to speak with one of our loan professionals at GVC Mortgage. Each buyer’s situation is different. We can help you assess what’s best for you, so you can make a financing option with which you feel comfortable. To schedule a consultation, contact GVC Mortgage today at (317) 564-4906.