The Non-Conforming Home Loan

With all the negative circumstances that can surround a home loan, fortunately there are still countless lenders that will offer a conforming loan due to its safety. With a conforming loan, the Fannie Mae and Freddie Mac corporations provide some reliable insurance for the lender. On the other hand, because of the complexity and the risks involved, many loan officers will not offer non-conforming loans.

By definition, a non-conforming loan is one that does not meet the criteria established by the bank. One example is a loan (sometimes referred to as a jumbo loan) which exceeds the conforming loan limit set yearly by Fannie Mae and Freddie Mac. Presently, this limit has been set at $417,000. In addition, non-conforming loans are often issued to those with seasonal contracts, poor credit, and those without the collateral needed. Some borrowers even pursue non-conforming loans to cover the entire cost of the home.

Because lenders are more reluctant to issue a non-conforming loan, the interest rates are often much greater. The borrowers credit is what is used to determine both the interest rate and the LTV, or the ratio of the loan amount to the value of the home. This LTV provides the lender with protection in that the property can be taken and resold if needed.

When selecting a non-conforming lender, a borrower must be extremely careful. He or she is vulnerable, and needs to pay close attention to the rates and terms set by the lender. It is important to understand the market and compare options. The website http://www.1refinanceloan.com is one known to provide a great deal of valuable information. The experts at http://www.1refinanceloan.com have been helping borrowers online since 1997.

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