Is it better to have a conventional loan or FHA to buy a home in Bakersfield?

Buying a home in a very competitive market like Bakersfield can be a challenge, so it's a good idea to ask for help from a Bakersfield mortgage broker early on in the buying process --before even looking at properties. This is the recommended route because getting your financial situation will determine how much you can afford to purchase.

Most pick either a conventional or FHA loan when choosing financing to buy a Bakersfield real estate. Let's look at whether a conventional loan is a better choice when purchasing a new home.

What is a conventional loan?

A conventional loan is any home loan that is not guaranteed by any government agency but still follows the guidelines set by Fannie Mae and Freddie Mac. Conventional loans can be either conforming or nonconforming.

What is an FHA loan?

On the other hand, an FHA loan is a government-backed home loan that the FHA or Federal Housing Administration insures.

These loans are designed for people with less available funds for a down payment or lower credit scores.

Advantages of getting a conventional loan

Down payment choices

If you can afford to put down 20% for your conventional loan, you can avoid paying for PMI or private mortgage insurance. It's important to know that conventional loans don't require 20% down as they did in years past. 

Conventional loans may ask for as little as 3% down as long as you pay private mortgage insurance (PMI). You can also stop paying for PMI once you've reached 20% on your home equity.

Flexible payment terms

You may also have the choice of terms, ranging from 15, 20, 25, to 30-year payment terms with conventional loans. While a shorter term means higher monthly payments, you can save thousands over the life of the loan compared to longer-term payments. If high monthly payments aren't possible, you can opt for a steady 30-year fixed-rate mortgage from Accelerated Lending Group.

Faster closing

Conventional loans may require less paperwork and can close faster than other loans. 

Wide variety of housing choices

Another advantage of getting a conventional loan is the wide variety of property types you can finance. You can buy a primary home, condo, vacation home, investment property, or manufactured home.

Security

Homebuyers usually choose fixed-rate conventional mortgages because they give more security with a locked interest rate for the life of the loan. This means that you pay the same monthly payments until the end, even if interest rates go up or housing prices fall.

If you want to know more, you can ask about conventional home loans in Bakersfield.

When does getting an FHA loan make sense?

In cases where a buyer has below-average credit scores and has little to no down payment capacity, an FHA loan makes more sense.

If you need advice on which loan type is right for you, contact Accelerated Lending Group of Bakersfield, CA.

There is no one size fits all loan product out there that you can apply for. Knowing which loan product is best for you boils down to understanding your financial situation. 

Is a conventional home loan by Accelerated Lending Group right for you? Our loan advisors are ready to help you choose the best loan product to fit your needs.

Give us a call for a free consultation, or start your pre-qualification application online today!


* Specific loan program availability and requirements may vary. Please get in touch with your mortgage advisor for more information.

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