There are many different types of
mortgage products and there are also several names for each type of product. For instance, you may hear the term "standard mortgage" and the term
"traditional mortgage" or even "conventional mortgage" all being used for the same type of mortgage
product. Since a standard mortgage is one of the most common types
of mortgages, it is a good idea to understand what that term means.
A standard mortgage can
either be for a new loan or for a mortgage refinance. However, in
order for it to be standard, it needs to be a fixed rate mortgage rather than an adjustable rate mortgage or a
balloon mortgage. The basic idea is that once you lock in an
interest rate, it will stay the same for the entire loan term, whether that is 15, 20, or most commonly, 30
years. Your payment for the principal and interest portion of the
payment will remain the same each month during the term of the loan.
Other requirements for
mortgage refinancing or an initial standard mortgage include the
necessity for a down payment. The down payment for this type of
mortgage is typically between 3 and 20% of the value of the home.
Because the lender is taking a risk by lending you money, he will require a down payment to show that you were
capable of saving the necessary money to get into the house and to help them believe that you have what it takes
to save enough to make the monthly payments in the future.
A standard mortgage will
also generally have the same qualification requirements from one lender to the next. In other words, if you are trying to qualify for a standard mortgage, it won't
matter which lender you go to, he will still require you to have a good credit score and history, a steady work
history, and so forth. The documents required for verification of
these things will also be the same from one lender to the next. Even if you are looking for a bad credit mortgage, if you can meet the standard requirements,
you will be getting a standard mortgage.
Because this type of
mortgage product is offered by nearly every lender, you will find that there is quite a bit of competition for
your business. This will allow you to make comparisons so that you
can find lenders that offer the best interest rates and closing costs as well as the best loan product for your
situation. Many people look at a standard mortgage first, and if
they can't qualify, they can look at other specialty mortgage products that may work for them.