Benefits of a Conforming Mortgage

Conforming Interest Rates in Ohio

Interest rates on a Conforming Loan tend to be slightly higher than a FHA mortgage or USDA mortgage with similar closing costs. However, interest rates will vary depending on credit scores and the amount of down payment. Generally, a homebuyer with higher credit scores will see a considerably lower monthly payment with a Conforming mortgage.

For instance with one of the many lenders that offer both Conforming and FHA mortgages, a borrower buying a $150,000 home with a 5% down payment could qualify for:

740 Credit Score

Conforming 30 Year Fixed @ 3.75%
Estimated Principal, Interest and PMI Payment: $739.50
Estimated Closing Costs: $1800 + appraisal
Estimated APR: 4.216%

FHA 30 Year Fixed @ 3.25%
Estimated Principal, Interest and MIP Payment: $773.52
Estimated Closing Costs: $1500 + appraisal
Estimated APR: 4.105%

So you can see that with a 740 credit score you will receive a lower monthly mortgage payment with a Conforming Mortgage compared to a FHA mortgage with a 1/2 percent lower interest rate. The main reason for this is the mortgage insurance premiums that FHA charges.

Conforming Closing Costs in Ohio

Closing costs on a Conforming Loan will vary from lender to lender, as each lender charges a different underwriting fee. On average lenders underwriting fees tend to be in the $700 to $800 range. Also, the interest rate that you choose will impact the closing costs. At lower interest rates, the lender will charge you discount points to get the interest rate, where at higher interest rates the lender will credit you money to pay some of your closing costs. Title fees will vary from title company to title company. A large part of the title fees are made up of Lenders Title Insurance, which are regulated by the State of Ohio.

Conforming Down Payment Requirements in Ohio

The minimum down payment for a Conforming Mortgage in Ohio is 3%. However, more often than not a home buyer should put a minimum of 5% down when considering a Conforming home loan. The increase in Private Mortgage Insurance and Fannie Mae or Freddie Mac adjustments when utilizing a 3% down payment eliminate much of the benefits that come with a Conforming home loan

Conforming Guidelines in Ohio

Conforming home loans are slightly more restrictive than a comparable FHA purchase mortgage. For instance, debt ratios are generally capped at 45% for a Conforming purchase mortgage, non-occupying co-borrowers income to improve debt to income ratios cannot be used with Fannie Mae (although they can with Freddie Mac).

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