Conventional Mortgage Refinance

What makes the conventional mortgage a popular option for MA home buyers is the range of options it presents. A conventional loan can be either a conforming or non-conforming product depending on how it fits into Fannie Mae or Freddie Mac’s underwriting guidelines or loan limits.

Fixed: The payment is fixed for the duration of the loan.

ARM: Adjustable Rate Mortgage can be fixed for a variety of time periods before it goes adjustable. Some of the more popular products are the 3/1ARM, 5/1ARM, & the 7/1ARM. The first number is the length of time it is fixed for. The 1 is the amount of times the loan can adjust in a year once it moves to it’s adjustable period.

Interest Only: An IO loan, as its commonly referred to as, requires that the home owner only pay the interest on the loan. The actual loan balance does not decrease , like a traditional amortized loan. This loan is not recommended for most borrowers but can be beneficial to investors, or a borrower who gets paid in lump sums and is disciplined with their finances.

The conventional loan limits in MA are broken down by county just like they are for FHA

County 1 Unit 2 Units 3 Units 4 Units
Barnstable 417,000 533,850 645,300 801,950
Berkshire 417,000 533,850 645,300 801,950
Bristol 426,650 546,200 660,200 820,500
Dukes 625,500 800,775 967,950 1,202,925
Essex 465,750 596,250 720,700 895,700
Franklin 417,000 533,850 645,300 801,950
Hampden 417,000 533,850 645,300 801,950
Hampshire 417,000 533,850 645,300 801,950
Middlesex 465,750 596,250 720,700 895,700
Nantucket 625,500 800,775 967,950 1,202,925
Norfolk 465,750 596,250 720,700 895,700
Plymouth 465,750 596,250 720,700 895,700
Suffolk 465,750 596,250 720,700 895,700
Worcester 417,000 533,850 645,300 801,950

 

PROS

  • Wider variety of mortgage products
  • Lower mortgage insurance rates than government loans
  • Mortgage insurance can be rolled into the interest rate
  • Loan be utilized for non-owner or investment properties
  • Easier appraisal standards
  • Can have multiple conventional loans at one time

CONS

  • Tighter underwriting guidelines
  • Less flexibility with DTI (debt to income ratio), & gifting down payment funds
  • Lower loan limits
  • Higher credit score requirements
  • Higher down payment requirements