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.