Many people are choosing to refinance their existing mortgages or purchase new homes due to the current low mortgage rates. Anyone seriously looking into buying or refinancing will definitely be considering the different loan options. Conventional loans in Houston are very popular and for good reason. There are some great advantages to these types of loans over government-backed FHA loans.
Mortgage Insurance
FHA loans require mortgage insurance regardless of the loan-to-value. This insurance typically lasts for the duration of the loan’s life. A typical conventional loan will only require insurance if the loan-to-value exceeds 80 percent. This translates to more savings for the borrower. In addition, Noble Mortgage & Investments insurance is credit sensitive. This means that you stand to get your loan at a discounted cost if you have a great credit score. The same cannot be said for FHA loans, which usually have a blanket premium for all lenders.
Higher Loan Amounts
Most conventional loans in Houston have less limits and higher amounts compared to FHA loans. This is especially useful for a lender looking for a large investment for a commercial property. This also provides flexibility in terms of investment options when the money is readily available.
More Loan Options
FHA loans can be limited in the types of financial products on offer. Private money lenders are more flexible, and may offer products not typically seen with FHA loans such as second home or investment loans. The private lenders also have more specialized products for those specifically designed for borrowers with restricted financial resources. Low to moderate income level borrowers are also more likely to find affordable financial solutions from private lenders. In addition, first-time home buyers can enjoy significantly lower down payments by taking this route.
Lower Cost
Private commercial and residential hard money lenders face stiff competition in the market, and are likely to offer lower cost loans. These may come in the form of waived closing costs or fees typically associated with receiving a loan. Conventional loans are also often held on by strict guidelines compared to FHA loans, increasing the chances of secondary investors purchasing them. The result is more affordable loans provided by lenders.
Flexible Terms
Lastly, conventional loans typically offer a wider variety of repayment period terms. Faster terms typically translate to lower rates, an advantage that may not be available with FHA loans.
The trick is to find the right lender. It is important to fully understand the terms of the loan, and work with a financial adviser to determine the best type of loan for your specific situation. Ultimately, a conventional loan from a good lender may be just what you need to finance your dream home or project.
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