You can get a mortgage in Salt Lake City to buy a home you want, but not all mortgages are created equal. Depending on the kind of home loan you get, the payments you must make will vary, and naturally, you will want payments that fit your financial situation.
To find the best fit then, you have to learn the different mortgage terms that will impact your payments.
Funded by Private Entities
As you shop for home loans, you can watch out for three terms: conventional, conforming, and non-conforming. The first term — conventional — refers to loans offered by private entities, whether they be banks, credit unions, or other non-government lenders.
As such, conventional loans have higher down payment requirements as well as rates than government-backed loans.
Follows Fannie Mae and Freddie Mac
The second and third terms — conforming and non-conforming — belong under conventional loans. Conforming loans mean loans that follow Fannie Mae and Freddie Mac guidelines on credit ratings, loan size, and other mortgage details.
With this, conforming loans usually have lower loan sizes compared to non-conforming loans.
Unrestricted by Other Entities
Non-conforming loans, on the other hand, lack any restrictions established by Fannie Mae or Freddie Mac. No limits mean higher loan sizes but with more fees and higher interest rates, although not all the time. Sometimes, non-conforming loans have rates that are more favorable than conforming loans.
Shop for the Best Mortgage
Now that you have learned some home loan terms, you have to pick. Obviously, your ultimate choice will depend on the specific details that lenders will offer you, but knowing which loan types you will shop for will quicken the shopping process. You first have to pick then between conventional loans and government-backed ones.
Most people go with the usual conventional loans. Should you go the same route, you then have to pick between conforming or non-conforming loans. In this stage of the shopping process, asking quotes from lenders will be crucial so that you can compare products.
With what you have learned, you can better control your mortgage shopping, and you can find one that best favors your situation.