Non-conforming Home Loans
In the realm of
non-conforming lending, the emphasis is not placed upon the type of loan
a borrower is applying for; rather the emphasis lies in his or her
credit grade or the risk associated with the loan. The credit grades
have been broken into six categories (A-, B, C, C-, D, and D-) and vary
depending upon the borrowers credit history and type of loan he or she
desires.
A borrower's
credit grade is often determined by their credit report. Mortgage lates
and general credit derogatories within the last 24 months will often be
a factor in determining a person's credit grade. Bankruptcies are
generally accepted and often times a person
currently in a Chapter 13 bankruptcy or recently out of a Chapter 7
bankruptcy can still buy a home! More times than not, a
borrower will not have to pay off any collection account that is older
than 3 years or any collection account less than $500 to $1,000 in
value.
In addition,
non-conforming loans generally have higher ratios ranging from 45% to
60% allowing the borrower to purchase a larger home than they would have
normally qualified for under conforming guidelines.
It is important
to remember that though the rates for non-conforming loans are higher
than FNMA/FHLMC mortgages, there is more flexibility with the
underwriting guidelines so that borrowers who would normally be denied
financing under "conforming" guidelines can have the opportunity to
purchase a home, pull out extra equity in their house or consolidate
their high interest rate credit cards.
click here
to return to the table of contents... |
