San Diego, CA (PRWEB) December 01, 2013
LoanLove.com is a borrower advice website that strives to help borrowers find loans that they will love by providing the latest information and insights into the mortgage world in an easy to understand and even entertaining way. The advice and information offered is packaged in a simple enough way that first time home buyers with no experience will avoid confusion, while also being “meaty” enough that even experienced home owners will be able to benefit from it. An article posted this November 22nd continues to help both experienced and new mortgage borrowers to better understand their options by providing definitions for some commonly confused loan terms. Among these terms are the often confused conventional and conforming loans. Being able to differentiate between the two when talking about mortgages can help borrowers to weigh their options better and fully understand how conforming loan limits might affect their home loan decisions.
The Loan Love article explains that it can be difficult to maneuver the maze of finances involved in the loan application process; this is even more true when there are many unfamiliar terms being used, some of which are used interchangeably media, websites and sometimes even real estate professionals, when in reality they really do not mean the same thing. Two of these commonly confused loan terms are conventional and conforming loans.
The article goes on to discuss the differences between Fannie Mae and Freddie Mac as well as VA and FHA loans. Finally, when discussing conforming loans, the article states: “Conforming to what, you might ask? A mortgage loan that is “conforming” refers to one that is within the conforming loan limits set by Fannie Mae and Freddie Mac, currently at $417,000, while also conforming to the funding criteria of Freddie Mac and Fannie Mae. A nonconforming loan, then, would be a loan that does not meet these requirements. So-called “jumbo” mortgage loans would fall into the category of nonconforming loans.”
This definition is followed up by the definition for so-called conventional loans: “This definition is simple: a mortgage loan that is not made or insured by the government is known as a conventional loan. That means by definition, a conventional loan may also be conforming, but not all conforming loans are conventional loans. Loans above the lending limits set by Fannie Mae and Freddie Mac are often called jumbo loans. The majority of conventional loans, however, follow the qualifying criteria that would make them conforming.”
So, when it comes to conventional vs. conforming loans, which one is the best? The article explains that this depends on the borrower’s situation. It says: “If you have an excellent credit history and are able to make a larger down payment, anywhere from 5 to 20 percent, choosing a conventional loan will usually snag you an attractive interest rate, while allowing you to avoid all the red tape. A higher down payment also means your home equity will build more quickly.”
For more information on commonly confused loan terminology, please read the full guide at LoanLove.com.