A non conforming mortgage is for those who have low credit scores or unusual circumstances. Non conforming loans are also referred to as subprime mortgages.
The term "non conforming" is used because these mortgages do not conform to the guidelines of the Federal National Mortgage Association (FNMA) or the Federal Home Loan Mortgage Corporation.
Non conforming mortgages will have higher fees and interest rates than conventional mortgages. This is because of the higher risk to the lender.
Before you assume that you'll have to go with a non conforming mortgage, be sure that your credit score actually is low. Studies have shown that roughly 15% of borrowers who apply for non conforming mortgages actually have credit scores high enough for them to qualify for less expensive conventional mortgages.
Therefore, it's worth your time to look at your credit record to make sure there are no mistakes.
For more detailed information about non conforming mortgages, please see our sub prime mortgage page.
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