Conventional, Not Just Your Parents’ Mortgage
Conventional Loans Aren’t Just for Our Parents; A message to millennials from a millennial
Generation gaps were first brought to light in the 1960’s. These generation gaps can make it difficult for even those in the same family to understand each other. Take for example, millennials waiting to start families, whereas their parents were married, often, with kids and in their starter homes by their early twenties. These generation gaps are caused by the conditions and historical events experienced during adolescence, resulting in changes in attitudes, skill sets, ideals, and even language. After all our generation, the millennial generation, redefined the word basic.
Basic [ bey-sik ] Adjective. In slang terms, characterizes someone or something as unoriginal and mainstream; often portraying that person/thing negatively.
Since becoming part of our everyday lives, many things have been deemed “basic” from specific footwear to specialty coffees to home décor. While a lot of this is in jest, could our generation, even if unintentional, be steering away from anything considered mainstream? With so much education on the variety of home loans and programs, we might find ourselves thinking of a conventional mortgage as “basic”. After all, isn’t the conventional mortgage the mortgage of our parents’ generation? Were they not the ones advising to put 20% down on a house? Maybe. But consider this; our parents may not have had access to the wonderful loan programs that we have today. In fact, given the interest rates in the 1970’s and 1980’s rising to 16.63% there is credence to why the conventional mortgage with a 20% down payment may have been the only feasible option.
A conventional mortgage is not just your parent’s mortgage and thinking such may be doing yourself a disservice. In our current market, this type of home loan is a viable option and may be one of the better options out there for home financing. A conventional loan typically has higher requirements than government backed loans. For example, government backed loans allow for lower credit scores and some do not require a down payment at all. This often means that because the borrower has a higher credit score and can put more money down, the interest rate will be lower on a conventional mortgage.
Given the historically low interest rates we have seen as of late, a lower one may not make much of a case for the conventional mortgage argument. However, there are other perks to having a conventional mortgage versus a government backed loan.
No Private Mortgage Insurance (PMI)- When you put 20% down on a home, you are not required to carry PMI, which is added to the monthly payment.
Faster Loan Underwriting- Less paperwork is required with a conventional mortgage and typically there are fewer delays than a government backed mortgage. This results in a quicker closing.
More Options- Many of the government backed mortgages have restrictions on the property type whereas a conventional allows for various properties, including condominiums. Additionally, you may have access to higher loan amounts with a conventional mortgage.
Stockton Mortgage has been a local lender for 20 years and is eager share what you need to know about the conventional mortgage or any other mortgage programs. Our home loan experts are here to guide you through the process of buying your home, including what you need to know before you do! If you have some questions before you get started, drop us a note in the chat box below. However, if you are ready to get started, click here to get a quick quote.
Written by Kim Shane
Kim, 34, is part of the marketing team at Stockton Mortgage. She can commonly be found kayaking, laughing at dad jokes, or eating cookies.