What Is A Conforming Loan? LoanLove.com’s New Guide Explains The Terminology

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Loan Love’s new guide helps borrowers understand some of the most commonly confused loan terms.

LoanLove.com is a borrower advice website that helps borrowers to understand their mortgage options in a fun and entertaining way. The website provides a number of articles and guides that both first time home buyers and experienced home owners can benefit from. Their large selection of valuable resources, first class knowledge and connections to top rated industry professionals has helped the website to fulfill its mission – to help borrowers find a loan that they will love by providing the latest information on mortgage lending trends, the real estate market and the U.S. financial landscape. The website’s newest resource is a loan terminology guide titled that helps to answer the question “What is a conforming loan?”

In this new article, Loan Love explains some of the more commonly confused loan terminology in order to help their readers better understand mortgage lingo and thus make better informed home loan decisions. Loan Love explains: “Maneuvering the maze of finances involved in the loan application process is tough enough without someone throwing a vocabulary quiz at you. Unfortunately, the terms tossed your way as you consider financing options for the home of your dreams can start to all sound alike. Worse yet, it is not unusual for the media, websites or even real estate professionals to confuse the issue further by using terms interchangeably, like conventional vs. conforming loans, that aren’t actually synonymous.”

The guide goes on to define some of the often mixed up or misunderstood loan terms, such as:

  •     Fannie Mae and Freddie Mac
  •     VA and FHA loans
  •     Conforming and conventional loans

These are terms that often get inadvertently interchanged, either because they sound similar or actually have similar (but not synonymous) meanings. However, knowing the difference can help borrowers to get the best home loan for their situations, so it pays to take a little time to review the terms. For example, conforming and conventional loans may seem like they are the same thing but in reality choosing one over the other may make a big difference to borrowers with different mortgage situations.

Loan Love explains in the article: “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.” It adds, “Despite the advantages of a conventional loan, however, you may need to show up at closing with a sizable amount of change, depending on your credit score and other factors. Origination fees, mortgage insurance, points, down payments and appraisal fees can quickly add up, so pay close attention to the details of your loan and not just the interest rate alone to avoid any surprises at closing.”

To learn more about the terminology used in the real estate and mortgage industry, please visit LoanLove.com for the full loan terminology guide.

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Kevin Blue
Loan Love
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