Like is everything a mortgage conventional? Is conventional a certain type of mortgage? Like why do I hear this phrase? Is it important? Do I need to know what it is? That’s all coming your way right now. Alright, my friends. Welcome back. Kris Krohn here and today we’re talking about advanced real estate vocabulary. As you get going deeper down the rabbit hole, you’re going to come across terms like conventional mortgage. I’m going to say, Kris, what’s a conventional mortgage like? Is it like an FHA loan or a VA loan or a USDA loan that is government backed and a conventional loan is not, it doesn’t meet the limits of Freddie and Fannie that they have set but there’s no government involved and usually it means a 20% down payment and the reason why is to basically skip out on mortgage insurance.
Once you’ve got 20% of a house paid down, you no longer need to pay mortgage insurance which will low your payments, generally a couple hundred dollars more a month depending on how much your insurance is and so the conventional mortgage is probably one of the most standard investment tools that you’re going to use in acquiring a property. You’re not going to really use government products, FHA, VA, those are for homes that you’re buying for who? Those are homes you’re buying for yourself. Conventional mortgage, you can use these mortgages to buy your own properties but you’re often using them in investment lending and what they’re done is it’s not secured by the government, it’s secured by private banks, it’s secured by other people’s money, it’s secured by basically non government firms that are out there writing mortgages and trading paper and doing all those different things. So conventional mortgage is what you’re largely going to be dealing with.
Mortgage 101: Refinancing
how do I know it’s a good time for me to refinance my mortgage? There’s a lot of reasons on why you might want to refinance. Sometimes you just need to be able to get some equity out maybe to help a child go to college, maybe you want to do some renovations on your home, or you may just want to reduce your monthly payment. Rates have a big impact on that but it really becomes a personal goal and objective question and David what options are available? Well there’s various options and I think some of those options are the ones that you have to consider in terms of your specific needs.
There’s an option to refinance simply because you want to lower interest rate and in today’s market there is that ability for many borrowers, the other is that you may want to be able to have some cash for whatever disposable needs you might want to address and let’s talk about the process and what one can expect. You know the process is pretty straightforward. It is. You need to have an appraisal, you need to have your income verifications, and your employment verifications. There’s a series of documents that you need to do but you know what it’s pretty quick easy to do just don’t be intimidated by it and in terms of quick how long does the process take? Is it quick, is it pretty fast? Generally it’s faster than a full documented mortgage when you are buying a home, but that also is dependent on you as a borrower to be able to have the documentation and satisfy the needs and requests of that lender.