Tips for Securing a Conforming Conventional Mortgage Loan

Posted on: 21 August 2020

While there are some people who can afford to purchase a home by paying in full with cash, the vast majority of people have to take out a mortgage loan to make purchasing a home a reality. When it comes to mortgage loans, conforming conventional mortgage loans are one of the most common products available due to the fact that they can be processed quickly, have competitive interest rates, and offer various term lengths. If you're planning on buying a home in the near future, you will most likely be advised to apply for a conforming conventional mortgage. Use the following tips to help you secure a conforming conventional mortgage loan:

1. Make Sure the Loan Amount You Want to Borrow Falls Within the Limits

The amount that one pays for a home will depend on a few factors, such as the average price of a house in a specific real estate market and one's budget. Before you begin shopping for a mortgage loan, you need to determine how much you want to borrow. In order to qualify for a conforming conventional loan, the total loan amount must fall within a specified amount, which can change from year to year. If the amount you want to borrow is above the threshold for a conforming conventional loan, you will need to apply for a non-conforming jumbo mortgage loan.

2. Clean Up Your Credit

When you plan on applying for a conforming conventional mortgage loan, one of the best things that you can do is work on your credit beforehand. Make sure that you inspect your credit reports so you know that there are no errors, and also find out what your credit score is. In the months leading up to when you plan to apply for a mortgage, pay off as much debt as possible, and avoid taking on any new debt. The better your credit rating, the lower the interest rate on your loan will be.

3. Have Your Down Payment Available

In order to be approved for a conforming conventional mortgage loan, you will need to have a down payment available. The size of your down payment will depend on the specific mortgage loan product that you are applying for. A good rule of thumb is to put down as much money as you can afford to. The more money you put down upfront, the lower your monthly mortgage payments will be. Learn more about down payments by contacting conforming loan program providers.