Non Conforming Mortgage Loan

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 amount is too high or because FNMA/FHLMC underwriting or other criteria are not met. An example of this is jumbo mortgages. They are also referred to as sub-prime or BCD. Those 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.

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 amounts of money lended, 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. This may require a financial consultant and some prayer. "Consider and hear me, O LORD my God..." (Psalm 13:3).

There are a large variety of lenders and types of unconventional lending. Those who are self employed and rely on tips, or can't verify their income can apply for a Stated Income loan. People who live off their assets or are under going a major change in life such as a divorce or career change might look to the No Ratio non conforming mortgage loan. However, there are other choices with a large variety of requirements, making the search for non conforming mortgage loans a bit more work than conventional ones. One bank may allow 10% down while another may finance the entire cost at a higher rate.

Lender comparisons are critical when dealing with any type of lending. Homebuyers can find non conforming mortgage loans and lenders both locally and online. They should start with their own bank by getting a quote. The homebuyer can then compare this rate to the quotes online and at other local lenders. Quote comparison websites can be quick and helpful, allowing consumers to fill out one web form for dozens of quotes from various lenders. With quotes in hand, borrowers can make a wiser decision about non conforming mortgage loans.

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