A non conforming mortgage loan is one that does not conform to Federal National Mortgage Association (FNMA) or Federal Home Loan Mortgage Corporation (FHLMC) guidelines because the loan amount is too high or because FNMA/FHLMC underwriting or other criteria are not met. These tips will help you understand if a non conforming loan might be right for you.
- Size of the loan. An example a non conforming loan is a jumbo loan. Since these loans are above the federally-mandated conventional loan limit of $417,000 the are classified as non conforming.
- You don’t want to give the details. People who have a financial situation that is complicated or unusual and don’t qualify for conventional lending may find that a non conforming mortgage loan is the preferred option. People who can’t verify their income or don’t want to disclose financial information, for whatever reason, can apply for this special type of lending.
- Risk. Conventional lending is fairly safe for the bank and the consumer because the amounts are reasonable and can be paid back. However, non conforming mortgage loans are much riskier for the lender not only because of the larger mortgage amount, but because the borrower shares far less information. With less risk, there are better interest rates; therefore, with a non conforming mortgage loan, the interest rates may be much higher, as the lenders see the chance of foreclosure to be more likely. Borrowers have to be smart and decide what is more important: privacy or saving money on interest.
Lender comparisons are critical when dealing with any type of lending. Home buyers can find non conforming mortgage loans and lenders both locally and online. With quotes in hand, borrowers can make a wiser decision about non conforming mortgage loans. Get your non-conforming quote right now by completing our online mortgage application.
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