Christian Conventional Mortgage Loan
A Christian conventional mortgage loan is a lending agreement that is given to those people with good credit scores and normal debt to income ratios. Each of the following lending agreement types are within the usual accepted norm and while no debt is always the best, one of the following may be a conventional mortgage loan best suited for the reader's situation. The information here should be treated just information but a lending officer or a real estate expert should be sought for expert advice. Making the right choice in a conventional mortgage loan can perhaps save a borrower many thousands of dollars over the life of the loan. So before looking at each of the following kinds of lending agreements that fall under the conventional category, keep these thoughts in mind:
First, a borrower will get the best conventional mortgage loan deal from a bank, credit union or perhaps an online lender if they fall under the category of dealing with customer deposits. When loaning out the money belonging to depositors, these lending entities are much more conservative in the type of borrower to whom they will lend. And because of the stellar nature of the borrower, these lending institutions can offer lower interest rates. Online banks may be able to beat local banks that have brick and mortar upkeep expenses. The caveat for getting an excellent conventional mortgage loan agreement is to have an unsullied or slightly sullied borrowing history and a low debt to income ratio.
Keep in mind that the average American credit score is 620. There are a couple of factors going into making that number including late payments, skipped payments and defaults on lending agreements. A few payments arriving one or two days late can begin to bring the score down. Those payments going thirty days past due are a very serious mark on a person's credit score and will affect borrowing ability for at least seven years, depending on the nature and length of nonpayment history. The other strong factor going into the credit score is the debt to income ratio. This ratio is figured by dividing monthly debt payments including a mortgage, such as car payments, medical payments, and credit card and department store accounts by the monthly income of the household. The ratio must be at least forty percent, but even lower ratio numbers can adversely affect the credit score.
Securing a conventional mortgage loan will depend on credit score and debt to income ratio. If a bank or a credit union turns down a lending opportunity, the borrower can go to lending companies, where a conventional mortgage loan is possible, but at higher interest rates and closing costs. The lending businesses do not have depositors' money to lend, but rather investor money that is available for higher risk borrowers at higher interest rates. Closing costs at banks can be as low as 1 to 2 percent while borrowing agreements from lending companies can be four or five percent or higher. And these costs are due at the time the lending agreement closes on the first day of implementation. "For there is not a word in my tongue, but lo, O Lord, thou knowest it altogether." (Psalm 139:4)
A conventional mortgage lending agreement assumes that a borrower will put down at least ten percent of the cost of the property. Many banks will not consider the borrower's request unless twenty percent is being put down, and there are situations in which the origination of the down payment must be disclosed. Often lending entities want to know if the money came from a relative as perhaps a loan until the house is secured by the bank. Sometimes the bank wants to know if someone else got a lending agreement for the borrower and will the borrower have to begin paying on that agreement as well as the first mortgage? The types of a conventional mortgage loan are varied.
They include the long standing thirty year fixed interest rate lending agreement and are good for those knowing that they will remain in their property for at least ten years. A lower interest rate lending instrument in the same genre is the fifteen years fixed rate lending agreement, although the thirty year rate can become a fifteen year agreement if more money is paid in the principle each month. By keeping the thirty year loan and paying more each month, a borrower has the freedom to pull back and just pay the regular amount if there are emergencies. Making it into the family of conventional property loans are the variable rate mortgages. A one year adjustable rate mortgage typically runs about two percent less than thirty years fixed in the first year. Each year after the loan is initiated the rate is adjusted for the following year. If a person may only stay in a house for less than three years, this is a good choice.
Also included in these traditional types of loans are the hybrid adjustable lending agreements such as the five, seven and ten year mortgages. These lending agreements offer fixed rates for the length of the loan, then are reset at a new rate, either higher or lower, depending on the state of the economy at that time. Finally, the most unconventional of the conventional loans are the balloon mortgages. With these loans, payments are amortized over a fifteen or thirty year period but the entire amount of the loan is due in five, seven or ten years. These are usually used by seller's offering financing to someone buying their property.
Affordable Christian Home MortgageAffordable home mortgage options vary greatly depending on consumer needs and credit. Affordable home mortgages offer the homeowner the assurance that they are getting the best deal. There are many things to look at when researching programs that enable consumers to afford buying a home. Don't assume that any loan is advisable just because a lender says its affordable. Choose a lender that is trustworthy, understands your situation, and one who has your best interests at heart. "And the servant answered Saul again, and said, Behold, I have here at hand the fourth part of a shekel of silver: that will give to the man of God, to tell us our way." (1 Samuel 9:8)
When choosing affordable home mortgages, take into consideration interest rate, down payment, lender/closing costs, and monthly payment. If the terms allow for a ridiculously low payment and plan to make double payments for as long as possible make certain that the affordable home mortgage has no prepayment penalty. Some programs are not designed for a homeowner to pay more on their affordable home mortgage. Home buyers may consider refinancing if the mortgage payments are too low; better rates may be available with an alternative plan.
Programs that offer home loans are primarily set up to help people with poor credit or insufficient money to put down at signing. This does not mean that a person with good credit or savings for a down payment should be denied help. This just means that the traditional reasons for an affordable home mortgage will not be used and it might be tougher to find a mortgage company to agree to double payments or a significant amount of cash down.
Affordable home mortgages can be found through conventional lenders or through lenders that specialize in helping people that might be at a disadvantage. This does not mean that one should work with any lender that is willing to help with real estate financing. Even if a lender offers attractive financing, they may make up the difference in their fees for setting up the loan. Consumers should be cautious about each package being considered.
All payment details need to be well understand--both the signing fees and monthly payments. How much will go to interest? How much will go to the principle? What allowances are there for double payments? These questions are very important to answer before making any sort of decision toward affordable home mortgages. Consult Godly counsel or a trusted friend that will lead you in the way that God intends us to use money. With prudent financial advice and a clear knowledge of all terms and conditions, buyers will be more confident that they have made wise choices.
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 Christian borrower.