Do I need to pay for private mortgage insurance (PMI)?
With a conventional loan, you will need to pay PMI if you put less than 20% down. However, you can apply to have the PMI removed4 once you've paid enough between mortgage payments (and possibly extra payments to principle) that your loan balance is 80% (or less) of your home's original value.
What are the benefits of applying for a conventional loan?
The biggest benefit of a conventional loan is the flexibility. Unlike a VA loan, you do not need to be a member of a particular group to apply for a conventional loan. And unlike a USDA loan, you do not need to be purchasing your home in a particular type of community to qualify. And if you have any unusual types of needs -- for example, if you want to buy a home and rent it out for a year before you move in, or you want to buy a multi-family property with more than four units -- you may be able to find a conventional loan that will allow you to do this.
Another benefit is the ability to forgo paying PMI once you have 20% equity in your home. With an FHA loan, you often end up paying for a form of mortgage insurance even after you have 20% equity in your home.
And finally, with conventional loans, you can shop around. Since different banks may have slightly different underwriting standards, you may find that you qualify for a loan with one bank but not with another – or that one bank gives you a better interest rate than another.
If you're ready to start shopping for your new home, get in touch with a Synovus mortgage specialist today. We're here to help you get the financing you need to purchase your next home.