NJ
CONVENTIONAL Loans
A NJ
conventional loan is a lender agreement that's not guaranteed
or insured by the federal government under the Veterans Administration
(VA)
or the Federal
Housing Administration (FHA).
A NJ
conventional loan can, however, follow the guidelines of
government sponsored enterprises (GSE's) like Fannie Mae or
Freddie Mac. Both Fannie Mae and Freddie Mac are stockholder-owned
corporations and are not part of the federal government.
At one point in our history, NJ
conventional loans were the only mortgage
loans available and they were all made by local lenders such
as banks, savings and loans, and credit unions. They kept
and serviced these loans in their own portfolio until they
were either paid in full or foreclosed on.
In the late 1930's, a secondary market was created which allowed
these local lenders to sell their loans, getting the full payment
much more quickly. Then the organizations that purchased the loans
owned the agreement and collected payments from the borrower. Today
it is very common for lenders to sell their loans to the secondary
market.
NJ
Conventional loans may be "conforming" and "non-conforming".
Conforming loans follow the terms and conditions set by Fannie
Mae and Freddie Mac. Nonconforming loans don't meet Fannie
Mae or Freddie Mac qualifications, but are also considered conventional.
Another
category of loans, jumbo loans, falls outside of Fannie Mae eligibility but is also
considered conventional. A jumbo
loan is a loan above the maximum
loan amount established by Fannie or Freddie and they usually have
a higher interest rate.
The 2009 conforming
loan limits remain at the limits set in 2006,
2007 and 2008. These guidelines put the maximum price for a first
mortgage at $417,000 for a single-family dwelling. If you live
outside of the 48 contiguous United States (in Guam, the Virgin
Islands, Hawaii, or Alaska), or the dwelling is for a two-family,
three-family, or four-family configuration, you qualify for a larger
loan limit.
NJ
Conventional loans can be fixed
rate mortgage or adjustable
rate mortgage with many
multiple configurations such as balloon
payments, Option ARMs, hybrid (combination of fixed and ARM)
loans, and a wide range of payment periods.
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