What is a Conventional Loan?

Considering a home loan? Our loan experts at RailTrust Mortgage are here to help you every step of the way. We’ll help you determine your ideal budget, check your credit score, and recommend the best loan and term for you.

Simply fill out the contact form to start the application process and get pre-approved.

We suggest you have the following available:

• Social Security Number
• Payroll stub(s) from the past two months of current employment
• W-2 forms from the past two years
• Bank statements from the last 60 days
• Federal tax returns from the past one to two years
• Home sales contract, fully executed by all parties
• Any other documentation that shows other current debts such as student loans, credit cards, car loans, etc.

For conventional loans, a 20% down payment is typical, although some first-time buyers can qualify for 3% down payment.

You should also consider how much you’ve saved, your house’s value and how the down payment will affect your monthly mortgage payment.

In any case, be sure to talk with one of our mortgage experts to get a realistic estimate based on your financial situation.

When you close on your loan, there are various fees you will pay including loan origination fees, appraisal costs, title insurance and other charges. You should account for about 2 to 4% of your loan when paying these costs.

Private Mortgage Insurance (PMI) can be paid in various ways, including being added to your monthly mortgage payment.

First, let’s explain each one:

The interest rate is the percentage you pay to borrow money from a lender for a specific period of time.

The APR includes the interest rate PLUS other fees and expenses that are assessed when you obtain a loan. These expenses can include prepaid interest, private mortgage insurance (PMI), some closing costs, and mortgage points (discount points).

So what is the difference between the two?

The APR will be higher than the interest rate because it does include other fees. Your lender must tell you about both rates – in fact, it’s a Federal law called Truth in Lending Act and all lenders must abide by it.

We recommend that you consider both rates when researching loan options so that you make the most of your investment in your new home.