If you’re looking to buy a new home, you may be overwhelmed by all the options that are available to you – not to mention the many financial terms that lenders use. Before you can choose a mortgage that fits your needs, you must first develop a basic understanding of different loan types. Conventional loans in Jacksonville area are among the most popular types of mortgages.
What is a conventional loan?
Simply put, a conventional loan is one that is not secured by government agencies such as the Department of Veterans Affairs or the Federal Housing Authority. There are two types of conventional loans: secured and unsecured. A secured loan requires collateral, while an unsecured loan is based on the lender’s creditworthiness and overall financial condition. Secured loans typically have lower interest rates, while unsecured loans require higher down payments.
Choosing between secured and unsecured
You may not have a choice when it comes to acquiring a certain type of conventional loan. Your lender will tell you what you qualify for based on the following criteria:
* Credit rating and history: Do you pay your credit card bills on time every month? How many cards do you have? Are they maxed out? What is your credit rating?
* Assets: Do you already own a home with some equity built up? Do you own a car, boat, or something else of value?
* Down payment: Keeping in mind that more is usually better, how much can you spend on your down payment? How much do you need to borrow?
* Do you have a stable income? Do you have a decent paying job, and how long have you had it? If you’re self-employed, you may be scrutinized further, even if you make a good income. Lenders need to know that you’ll be able to pay them back.
Carbon Capital is a leader when it comes to conventional loans. View their website for further information.