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How a Conventional Mortgage or Loan Works

January 28, 2022 Leave a comment

How a Conventional Mortgage or Loan Works

A conventional mortgage or conventional loan is any type of home https://americashpaydayloan.com/title-loans-mi/ buyer’s loan that is not offered or secured by a government entity. Instead, conventional mortgages are available through private lenders, such as banks, credit unions, and mortgage companies. However, some conventional mortgages can be guaranteed by two government-sponsored enterprises; the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac).

Key Takeaways

  • A conventional mortgage or conventional loan is a home buyer’s loan that is not offered or secured by a government entity.
  • It is available through or guaranteed by a private lender or the two government-sponsored enterprises-Fannie Mae and Freddie Mac.
  • Potential borrowers need to complete an official mortgage application, supply required documents, credit history, and current credit score.
  • Conventional loan interest rates tend to be higher than those of government-backed mortgages, such as FHA loans. Read more…