If you’re like most people buying a loft or condo for sale in DTLA, you know you’ll need a mortgage – but what kinds of options do you have?
Today we’re talking about conventional loans.
What Are Conventional Loans?
A conventional loan is a loan made by a lender to a borrower. It’s not backed by the federal government; they don’t insure it, either.
There are two types of conventional loans: conforming and nonconforming.
- Conforming loans are conventional mortgages that follow Fannie Mae and Freddie Mac guidelines.
- Nonconforming loans are conventional mortgages that do not follow Fannie Mae and Freddie Mac guidelines.
Most conventional loans have a lifespan of 30 years. That means you’ll have 30 years to repay the money you borrowed. However, it’s still possible to get a shorter loan – sometimes they’re available as 20-, 15-, or even 10-year loans.
A Word on Short-Term Loans
The shorter your loan, the higher your payments are likely to be. That’s because you have to pay back the principal – the amount you borrowed – faster than you ordinarily would. However, the good news is that you’ll pay less money in interest because you’ll stop owing the lender sooner.
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Fixed and Adjustable Rates
Conventional loans can have fixed interest rates or adjustable interest rates. If you have a fixed-rate mortgage, your interest rate stays the same until you pay off the house. If you have an adjustable-rate mortgage, your interest rate can change at the intervals you agree upon with your lender.
Are You Buying a Loft or Condo in Little Tokyo?
If you’re thinking about buying a condo in Los Angeles or a nearby community, call us at 213-254-7626 or contact us online. While you’re here, check out our: