What is the Difference Between Conforming Loans Nonconforming Loans

If buying a house is in your near or even distant future, you'll want to consider different mortgage options. Two of the most popular home loans are known as conforming loans and nonconforming loans so finding the one that works best for you and your lifestyle is key. Balboa Realty breaks down the differences of these types of mortgages. Purchasing a house is one of the biggest and most exciting life choices and it's important to make sure it's done right. Balboa Realty, the leaders in Orange County real estate and Orange County property management is here to guide you.

Are you searching for Orange County homes for sale? Call Balboa Realty today: 949-386-8310

Conforming Loans

A mortgage that adheres to specific rules and guidelines set by Fannie Mae and Freddie Mac's Federal regulator is known as a conforming loan. On an annual basis, the Office of Federal Housing Enterprise Oversight sets the funding criteria. The amount of the loan must be equal to or less than the loan limit and these conforming loans often offer lower interest rates which is very advantageous. Helpful tip: The term "conventional" is also frequently used.

Find an Orange County homes for sale today. Call Balboa Realty: 949-386-8310

Nonconforming Loans

This type of loan does not have to follow specific funding limits and guidelines of the conforming loans set by Fannie Mae and Freddie Mac. Financial lenders who offer non conforming loans have to find investors to back these loans because it's more difficult to sell these types of loans. Nonconforming mortgages are riskier for the lender so it's quite common for them to have required upfront fees, insurance requirements, and higher interest rates. Federal Housing Administration created the original nonconforming mortgage option by insuring loans. Some of the benefits are that your entire application package in cosidered and you can have a lower credit score and still be able to receive a noncomforming loan. Also, buyers only need a 3.5% down payment to qualify for this type of loan.

Published on Tuesday, October 24, 2017