QandAs: Loans

What is a Non-Conforming Mortgage Loan?

Answer:
Non-conforming mortgages are loans that do not

meet the purchase requirements set forth by two federal agencies, Freddie Mac and Fannie Mae. For a mortgage loan to qualify for purchase by the agencies, the loan amount for a one-family residence must not exceed $417,000, and borrowers must meet all income and credit requirements.

A non-conforming loan is necessary when the purchase amount exceeds $417,000, the borrower cannot verify income, or the borrower has poor credit.

Non-conforming loans are widespread in expensive housing markets. However, despite rising popularity, some lenders do not offer non-conforming loans. To find a mortgage lender that offers these types of loans, borrowers may have to work with a mortgage broker who has direct access to various loan programs.

There are advantages and disadvantages to acquiring a non-conforming mortgage loan. The primary advantage is that borrowers can purchase a more expensive home. Another advantage is that non-conforming loans help sub prime and unique borrowers qualify for a mortgage. This includes persons who are self-employed, those with credit problems, and borrowers who need a bridge loan. On the flipside, a more expensive home equals a higher monthly payment. In addition, borrowers who choose a non-conforming loan should anticipate a higher interest rate, which will also increase payments.


	more Q&A sessions like this
	What are the different types of Mortgages? What is Jumbo Loan? What is a Conforming Mortgage? Why are Jumbo Mortgage Rates higher than Traditional Mortgages? Who is Fannie Mae and what do they do? Who is Freddie Mac? What is a 1003 Form? What is a Super Jumbo Mortgage? What is 3/1 Jumbo ARM?