Conventional loans may be conforming and non-conforming. Conforming
loans have terms and conditions that follow the guidelines set forth by
Fannie Mae and
Freddie Mac. These two stockholder-owned corporations
purchase mortgage loans complying with the guidelines from mortgage
lending institutions, packages the mortgages into securities and sell
the securities to investors. By doing so, Fannie Mae and
like Ginnie Mae, provide a continuous flow of affordable funds for home
financing that results in the availability of mortgage credit for
A Non Conventional Loan is
Any mortgage loan that is a VA,
RHS or an
Fixed rate loans
With fixed rate mortgage (FRM) loans the interest rate and your mortgage
monthly payments remain fixed for the period of the loan. Fixed-rate
mortgages are available for 30 years, 20 years, 15 years and 10 years.
During the early amortization period, a large percentage of the monthly
payment is used for paying the interest. As the loan is paid down, more
of the monthly payment is applied to principal.
Adjustable rate loans
Variable or adjustable loan is a loan whose interest rate, and
accordingly monthly payments, fluctuate over the period of the loan.
With this type of mortgage, periodic adjustments based on changes in a
defined index are made to the interest rate. The index for your
particular loan is established at the time of application.
Fixed period arms, two step mortgages, buy down mortgages, rate
reduction options, and