What Is A Conventional Home Loan And How Can It Save You Money?
Conventional loans are one of the most popular types of home loans. There are a number of reasons why these loans are preferred by homeowners compared to other types of loans.
There are three main types of conventional home loans: fixed-rate, adjustable-rate, and interest-only. If you are looking for the best conventional loans you can also check this link .
A fixed-rate loan has an interest rate that remains the same for the life of the loan. This type of loan is ideal for borrowers who want predictable monthly payments and don’t expect to sell or refinance their home in the near future.
An adjustable-rate loan (ARM) has an interest rate that can change over time. The initial interest rate is usually lower than a fixed-rate loan, but it can increase or decrease over the life of the loan depending on market conditions. This type of loan may be a good option for borrowers who plan to sell or refinance their home within a few years and want to take advantage of lower initial rates.
An interest-only loan allows borrowers to make low monthly payments for a set period of time, typically five to ten years. At the end of this “interest only” period, the borrower must begin making principal and interest payments which will be higher than their previous payments because they will now be paying off both the principal and interest on the loan.
Interest-only loans are often used by investors who are flipping properties or by homeowners who want to keep their monthly payments low during a period of tight finances.