Does convetional mtg mean the borrower must put down 20% of the selling price? OR Does it mean the mortgage must meet an 80% LTV? So, for example, if you purchase a house at 90% of appraised value, can you then just put down the remaining 10% to qualify for a conventional mtg? Also, does the same apply to PMI? Thanks!
Since the bank will use the LOWER of Appraisal or Purchase Price, the answer is BOTH. Whivhever figure is lower, as long as the bank lends 80% or less of that amount it is a Conventional mortgage. PMI only applies towards the value of the property, not the cost.
The term "conventional" is usually used to differentiate between government loans (e.g. VA, FHA) and non-government loans (conventional). It has nothing to do with how much you put down.
So - I'm standing at my CU and the loan rates are "4.5% - 30 yr Conventional" you're saying in this case it simply means "private" financing versus government (fha,va)?
Re: Re: Definition of conventional mtg? Wow! Is that 4.5% rate for 30 years fixed, or an ARM? If the former, can I have the name of your CU please? And can you introduce me as your long lost brother?
Re: Re: Definition of conventional mtg? Also....some places use the term "conventional" in place of the more mortgage technical term "conforming." Here ya go: http://mortgage-x.com/library/loans.htm
Re: Re: Definition of conventional mtg? I wouldn't necessarily believe what it says on that site -- I read only a little of it and noticed several places where the information is incorrect. The term "conforming" refers to loans that are $333,700 or under for one unit. The terms "conventional" and "conforming" are not interchangeable. Earlier, someone mentioned PMI. If your scores are good enough, you can avoid PMI entirely by taking a loan for 80% of the lesser of the sales price or the appraised value, and taking a 2nd mortgage to make up the difference. PMI is not deductible, and the interest on a purchase money 2nd is, plus your total payment will probably be lower than it would be with PMI.
Re: Re: Definition of conventional mtg? also an FHA will loan only so much TX is 154,800.00 ymmd in your state and there are programs for down payment asst with an fha and they go by your ability to pay the mortgage not so much your fico score as a conventional goes by fico score but there are more differences as well.
Re: Re: Definition of conventional mtg? within the "conventional" definition there are different rate tiers based on LTV and Credit. a 4.5% rate may be for someone who is A paper w/20% down whereas someone with C paper and 3% might be at 8%. Conforming means loan amount under $322k. Non-conforming is over $322k PMI is insurance you pay to guarantee the loan. 80-85% cltv is 20% of the purchase price over the term of the loan. 85-90% is 25%. 90-95% is 30% and over 95% CLTV is 35%. as an FYI - advertised rates tend to be for 80% ltv "A" paper, unless otherwise stated.
Re: Re: Definition of conventional mtg? exactly! I otta know , been in the housing business since 1973
