Best Buy: Real Estate Loans

Shopping for a real estate loan can prove a challenging task. With so many options available will you get the one that suites you best. Here is some information that can help. Your lender can tell you about the many options available, but here we will look at conventional loans. A conventional loan is a loan that is not insured or guaranteed by a government entity. Conventional loans can be 15- year or 30- year. There are five types of conventional loans.

1) 80% conventional- the loan to value ratio is 80% of the appraised value or sale price of a property, whichever is less. You borrow 80% of the appraised value or sale price of a home, whichever is less and put a 20% down payment on the home. This type of loan is 30 year, fixed rate.

2) 90% conventional- a 10% down payment must be made, with at least 5% from the buyers own cash reserves. The interest rate could be the same or higher than an 80% loan, this depends on the buyer. a 90% conventional loan has private mortgage insurance premium which adds to the cost of the loan.

3) 95% conventional- a 5% down payment must be made from the borrowers own cash reserves. The interest rate could be the same as the other two loans, but again varies on the particular buyer. Private mortgage insurance is involved which adds to the cost of this loan.

4) 100% conventional- good credit is a criteria for this type of loan, there is no down payment, but the borrower must live in the home as an owner-occupant with the home as the primary residence. Interest rates will vary on lenders, there is also a private mortgage insurance premium involved which adds to the cost of the loan.

5) easy qualifier conventional loan- lenders modify the qualifying standards based on the needs of the borrower. A down payment of usually 20% or more is required, again this may vary depending on a borrowers situation. Interest rate is usually determined on factors such as credit score. Private mortgage insurance is not an issue due to the 20% down payment required.

In today's market there are so many loan options available ask your loan officer to explain them all not just the ones they are trying to sell.