conventional home loans | the basics

The term “conventional home loans” refers to those mortgages which are not insured or guaranteed by the Federal government. Some conventional loans strictly follow the guidelines set forth by Fannie Mae and Freddie Mac. These conventional loans are called “conforming” home loans because they conform to agency guidelines. Of course, one can make the argument that conventional loans that conform to Fannie and Freddie guidelines are somewhat backed by the Federal gov’t, especially since the GSEs were bailed out by the American tax payer at large.

In my market (the areas around Portland, Oregon and Vancouver, Washington), the popularity of conventional home loans has been steadily decreasing since the economic meltdown of the last two years. There are basically two reasons for that:

1. If you are talking about refinancing a home loan, a conventional loan is best for those with plenty of equity and high credit scores.
2. If you talking about a loan to buy a home, conventional home loans are best for those with a large downpayment and a high credit score.

Obviously, there are less of these people when the economy at large, and the housing market in particular, circle the proverbial bowl.

If you have any questions, complaints, paranoia, or existential angst regarding conventional home loans or Real Estate in Oregon & Washington, please feel free to contact me by clicking here or hitting me up on Facebook or Twitter. Thanks!

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