Non Conforming Mortgage Loans

Non conforming mortgage loans are offered by many lenders to aid buyers with poor credit, but also, whom the lenders believe will not fall behind in their payments or have to file bankruptcy before the mortgage is paid off. Often the credit rating has been damaged by events that were not the debtor's fault (such as extraordinary medical expenses or job loss), so the lender is willing to offer this financing for special circumstances. A potential borrower will find it helpful to understand the difference between a conforming and non conforming mortgage loan.

A "conforming" arrangement is one almost any lender will approve. The buyer has very good credit, with no late payments for the previous twelve months, has been on his present job for at least two years, can make a substantial down payment, has money for closing costs, and at least two house payments after all costs, and has an income to debt ratio under 38 percent. Requirements for a non conforming mortgage loan differ in several says. The borrower has a job and can make payments, his credit report is used only to determine the interest rate and loan value to the value of the home ratio. Where there is very poor credit, lenders protect themselves by limiting non conforming mortgage loans to only sixty-five to seventy-five percent of the property value. Each lender has their own guidelines for these special financing arrangements, but most will say that no more than fifty percent of income goes to housing, and the maximum lended is two-thirds on total indebtedness. Lenders consider these safe guidelines for generous financing arrangement and presume they won't have to worry about defaults.

The point of having these agreements with high risk borrowers appears to be that the financial community will do whatever it can to make it possible for every working American who wants to own a home to do so. For individuals and families who have been unable to have their own place before, and now are ready for the responsibility, the door can be opened with a non conforming mortgage loan. "They measuring them selves by themselves, and comparing themselves among themselves are not wise. But we will not boast of things without our measure, but according to the measure of the rule which God hath distributed to us, a measure to reach even unto you" (2 Corinthians 9:12-13).

Sometimes it means coming out of a time of incredibly bad luck, and for some it means they've finally gotten a better paying job that leads them to seek an advantage to new financial security. However they come about, the benefit of non conforming mortgage loans is their availability. It is generally known and accepted that when people have their own homes, they are prone to take better care of them than one they rent, so these financing options raise the self-esteem level for the individual or family who receives a non conforming mortgage loan to finance their home.


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