Conventional Mortgage
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Conventional mortgages have long been the preferred type of mortgage loan offered by banks and mortgage companies, whether they are offered to walk-in customers, or the currently popular online method. Since so much of our business is now conducted on line, it is no surprise that application for obtaining a conventional mortgage loan without ever seeing a loan officer in person is common. Some of the lending companies are offering the services of title search and insurance in addition to the financing. An additional convenience to a borrower searching is a full disclosure of services provided and limitations, states in which they are licensed, and specific instructions for documents in that state--all of which makes it easier for a potential borrower to determine if the company will suit his/her needs.
Besides mortgage companies, there are a number of broker firms that will do some of the research for a borrower, and submit the names of at least four mortgage lenders to choose from. Of course, the borrower can do the research himself and compare to find the best deal for his conventional mortgage. A fairly recent innovation to this type of financing is the Adjustable Rate Mortgage (ARM). These conventional mortgages are set up so the borrower pays interest only for the first five or ten years at a rate that is adjusted each one, three, or five-year period. Payment on the principal begins after the interest is paid off. While lenders emphasize the lower interest ultimately paid in this method, it is generally understood that the people who opt for that kind of payment are not intending to pay the house off. They are gambling that the house is going to increase in value during the years they are paying interest only, and when they sell their house five or ten years down the road, and they will be able to pay off the debt and enjoy a profit. Most borrowers, (those interested in making their house their permanent residence) are taking the 20 or 30 year fixed interest mortgage.
A few of the mortgage companies providing these place all or part of the closing costs on the lender, but many do not, so it is important for anyone seeking conventional mortgages to get all the facts before signing any contract. Trusting in the Lord in all of our circumstances is also important. "If ye will not believe, surely ye shall not be established." (Isaiah 7:9b) Credit is also less important than it was a few years ago and these mortgages are offered to persons with bad credit as well as those whose credit is stellar. There are undoubtedly added costs with a conventional mortgage when the borrower has poor credit, and that is another matter requiring careful scrutiny by the borrower.
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