If you're in the market for a new home then you have a few loan options available to you, including FHA, USDA, and conventional. Depending on your particular situation, each loan provides specific benefits. Before you opt for an FHA or USDA home loan, take a look at the advantages you'll enjoy when you choose a conventional loan for your new home purchase.
More Desirable to Home Sellers
When it comes to buying a home, you want to be as desirable to sellers as possible, especially in a competitive market. Sellers want to know that their homes will sell quickly and fund quickly. When a seller is faced with multiple bids, they want to know that the bid they choose will afford them the fewest headaches. That's where conventional mortgage services become beneficial. Because FHA and USDA loans require additional steps, such as inspections and a more stringent qualification process, they can create headaches and delays for the motivated seller. If you want to ensure success in a crowded market, your best option is a conventional home loan.
Lower Costs for Mortgage Insurance
If you want to avoid hidden costs associated with your home loan, you need to go with a conventional loan. FHA loans require lenders to carry mortgage insurance for the duration of the home loan -- not only that, but they charge more for the coverage. While conventional loans do come with the mortgage insurance requirement, the cost of the coverage is greatly reduced, which gives you the option of paying cash upfront for the coverage. Additionally, once you've paid of a portion of your loan, the mortgage insurance requirement will be cancelled.
Greater Lender Flexibility
If you have credit issues that may pose a problem during the automatic underwriting process, a conventional loan is the way to go. Issues such as bankruptcies that have been discharged within the past four years, medical debt that has not been paid off, and student loan debt can all be cleared through a process known as a manual underwrite.
Increased Access to Loan Servicing
If you want to enjoy the benefit of being selective with the lender that you choose, you need to apply for a conventional loan. One of the problems associated with FHA and USDA loans is that fewer lenders carry these types of loans, which means your options will be drastically reduced. Because conventional loans are easier to process and present fewer obstacles, you'll have a wider selection of lenders to choose from. You'll also enjoy the added benefit of having lenders compete for your business, which could translate into lower fees and interest rates.
Share20 April 2019
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