Listen to a Business English Dialogue About Conventional mortgages
Penelope: Hey Justin, do you know much about conventional mortgages? They’re one of the most common types of home loans.
Justin: Yeah, I’ve heard of them. They’re loans that aren’t backed by the government, right?
Penelope: Exactly! With a conventional mortgage, you usually need a good credit score and a down payment of around 20%.
Justin: So, if the loan isn’t backed by the government, does that mean there are stricter requirements for approval?
Penelope: That’s correct. Lenders often have stricter guidelines for conventional mortgages since they’re taking on more risk without government backing.
Justin: What about interest rates? Are they usually higher or lower for conventional mortgages?
Penelope: It depends on various factors like market conditions and your credit score, but generally, interest rates for conventional mortgages can be lower if you have a strong credit history.
Justin: That makes sense. And what about private mortgage insurance (PMI)? Is that required for conventional mortgages?
Penelope: PMI is typically required if you put down less than 20% on a conventional loan. It protects the lender in case you default on the loan.
Justin: Ah, I see. So, saving up for a larger down payment can help avoid having to pay PMI?
Penelope: Exactly. Putting down a larger down payment not only reduces your monthly payments but also eliminates the need for PMI in many cases.
Justin: That’s good to know. Thanks for explaining, Penelope. Conventional mortgages seem like a viable option for those who meet the requirements.
Penelope: You’re welcome, Justin. They’re definitely worth considering if you’re in the market for a home loan.