How many homes have you bought and sold? How many times have you sat at a closing table, signed your name about a thousand times, walked away with the key to your new home and all you understood about your mortgage was how much the monthly payments were?
I’ve done that – 10 times!
Before I became a Realtor®, mortgage lending was all a big blur to me. I knew I applied for a mortgage loan, gave the lender tax returns, bank account records, and my bosses’ contact information to verify my employment. But what happened between then and the time I walked away from the closing with my new key 
and a silly grin – no clue! The whole mortgage lending process was a mystery.
I know from dealing with home shoppers every day that there are a lot of people out there just like I was. They have no clue about the mortgage lending process, and most even think that in today’s real estate market it’s virtually impossible to get a mortgage loan.
So, I’m making this the first in a series of blogs that I hope will help you understand the current mortgage market in Covington, and realize that there is still plenty of mortgage money available for qualified buyers from reputable lenders at excellent interest rates.
Many of the terms in this series will be very familiar. You’ve likely heard them before, but may not fully understand what they mean. However, after reading this blog, you should be comfortable with applying for a mortgage loan. You will understand all those “foreign” mortgage lending terms. And you will understand the mortgage lending process.
Let’s begin the series with the types of mortgage loans available for the Covington real estate market. The most common is a “Conventional” loan.
The U.S. government is a major player in the residential mortgage market. About one out of five home loans is either insured or guaranteed by an agency of the federal government. These mortgages are called - guess what – government loans. The remaining 80 percent of the residential mortgages originated in the United States are referred to as “conventional loans.”
Conventional loans are secured by government-sponsored entities (GSEs) such as Fannie Mae and Freddie Mac. 
Conventional loans can be made to purchase or refinance homes with first and second mortgages on single family to four-family homes.
Conventional loans may be either “conforming” or “non-conforming” loans. A mortgage loan which conforms to certain guidelines and limits allowing the loan to be bought by Fannie Mae or Freddie Mac is called a conforming loan. Mortgage loans which do not fall within these limits are called non-conforming, or sometimes “jumbo” loans.
When President George W. Bush signed into law a $150 billion federal economic stimulus package in mid-February, he gave Fannie Mae and Freddie Mac the ability to buy conforming loans up to 125% of an area’s median home price, capped at $729,750.
The conforming loan limit on conventional loans in Newton and Rockdale Counties is now $417,000.
Other than conventional loans, there are the government guaranteed FHA and VA loans and even a few “sub-prime” loans still available in the Covington real estate market. Sub-prime loans are high risk loans for borrowers who cannot qualify for conforming conventional, non-conforming conventional, FHA or VA programs.
I’ll explain each type of loan further in future issues of this series. However, in Part 2, we’ll talk about what “underwriting” mortgage loans means to you, and whether it’s better to be “pre-qualified” or “pre-approved” for a mortgage loan when you start the search for your new home.
I invite your questions and comments throughout this series on mortgage lending in the Covington real estate market, and hope it will make you more confident and comfortable about wanting to buy a new home or selling the one you have.
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