Question

Define: Conventional Mortgage

Answer 1

A conventional mortgage is a type of loan which is not backed by government . This type of mortgages are offered by private lender which could be credit unions or banks or mortgage companies.

Conventional mortgages generally have a fixed rate of interest so it can be said that interest rate do not change much throughout the life of the loan. These mortgages are offered with strict terms and condition and regulations are also strict as private lenders are involved and there is no intervention from government agencies. However some of the conventional mortgages are backed by Federal National mortgage association and Federal home loan mortgage corporation.

The rate of interest on such loans are generally higher than government loans because these are obtained through private lenders and mortgages houses. Conventional mortgage buyers generally make large interest payments and are more solvent and risk free than the government home loan buyers.