Being in real estate it helps to understand the mortgage options, loan process and anything else that may help (or hurt!) a transaction in order to best serve clients. Obviously not all mortgage bankers & lenders are alike so it is very helpful to have a relationship with good mortgage sources that you feel safe with. I have a few!
Now, onto the differences between conforming & non-conforming loans...
The most common home loans fall into one of two categories: conforming or non-conforming. The conformation is referring to the guidelines of whether or not a loan can be sold to either of the two largest mortgage purchasers: Fannie Mae or Freddie Mac. The loans that conform to their guidelines are fittingly called conforming loans and those that do not, non-conforming loans.
Conforming Loans
The standardization of these loans means there are underwriting rules & loan requirements:
Benefits:
Drawbacks:
Non-Conforming Loans
These loans do not meet Fannie Mae or Freddie Macs requirements and include jumbo loans & the government backed loans such as FA, VHA or USDA.
Benefits:
Drawbacks:
It's important to understand that not all lenders are the same! For example not all lenders can provide construction loans and if buying acreage or a large parcel of raw land, it may be beneficial to work with a lender that is active in those types of purchases. I have a few excellent lender sources that are local, knowledgable and offer a high level of service to their clients. Contact me if you would like more information!
Click the article below for an overview of the 6 most common types of mortgages:
Forbes - 6 Most Common Mortgages