• Conventional loans have a number of benefits.cash image by Alexey Klementiev from Fotolia.com
  
  While there are plenty of exotic loans and mortgages on the market, there is a lot to be said for conventional loans when borrowing money. Conventional loans carry a number of important benefits, and just as important, they can be less risky.
  
  

Held by the Lender

• One advantage of a conventional loan over a loan with a teaser rate or adjustable rate is that the loan is more likely to be held by the lender, rather than being sold off as part of a package of securities. Having the original lender hold the loan to maturity can mean better service and more personal attention when there is a problem down the road. Trying to track down and deal with a far off institution can be much more difficult than simply walking down the street to the lender who originated your conventional loan.
  
  

More Flexibility

• Another important advantage of conventional loans is that the lenders who write such loans are often more flexible when it comes to collateral for the loan. Depending on the nature of the loan and your financial situation, you might be able to use property other than the home itself to secure a conventional mortgage loan on a principal residence or investment property.
  
  

Closing Cost Flexibility

• Closing costs are a big impediment to many first-time home buyers, especially those with little to put down on a property. While mortgages backed by the federal government generally have little flexibility when it comes to closing costs, lenders who make conventional loans have a bit more leeway. Some private lenders are willing to fund part of the closing costs in exchange for a higher interest rate. It is of course important for borrowers to run the numbers and determine if the monthly payments are still affordable at the higher rate.