The simple definition of a "non-conforming home loan" is: You have a job and can make the payments. Your credit is used only to determine your interest rate and the loan amount to value of the home ratio. This ratio is referred to as your "LTV" or "Loan To Value". There are many lenders who will lend to borrowers who are in foreclosure or who are currently in a bankruptcy.
Borrowers who are in these situations often have the worst possible credit. Lenders protect themselves by keeping the LTV low, about 65% to 70% of the appraised price of the property. By doing this, the lender is very well protected. If the borrower goes into foreclosure again with the new lender, the LTV is low enough that the lender can take the property back, sell it at a discount for a quick sale, and still pay off the debt.
The lender rarely cares if there are other mortgages against the property, as long as the lender is in the first position. You see, when a lender takes a property back from a borrower the first lien position gets the proceeds of the sale first, then the second, then the third, etc. Rates for these types of loans are usually 1% to 6% higher that conforming rates.
CONFORMING LENDERS' GUIDELINES
Lenders use three qualifying guidelines to determine what size mortgage you are eligible for. They are as follows:
1. Debt ratios:
Your monthly costs (including mortgage payments, property taxes, insurance) should total no more than 28% of your monthly gross (before-tax) income.
Your monthly housing costs plus other long-term debts should total no more than 36% of your monthly gross income.
Basically, lenders are saying that a household should spend not more than about one-fourth oits income (28%) on housing and not more than about one-third of its income (36%) on total indebtedness (housing plus other debts). Lenders feel that if they follow these guidelines, homeowners will be able to pay off their mortgages fairly comfortably and lenders will not have to worry about loan defaults and foreclosures.
2. Credit:
Any late payments must have good explanations and generally no more than one 30-day late payment is permitted within 12 months.
3. Funds to Close:
You must have the down payment, which must be your own funds, and the closing costs. In addition, you must have at least two month's extra payments in the bank.
NON-CONFORMING LENDERS' GUIDELINES
1. DEBT RATIOS:
Every non-conforming lender has a different set of guidelines; therefore, this section should be used only as a general example. These types of lenders are saying that a household should spend not more than about one-half of its income (50%) on housing and not more than about two-thirds of its income (60%) on total indebtedness (housing and other debts).
Lenders feel that if they follow these guidelines, homeowners will be able to pay off their mortgages fairly comfortably and lenders will not have to worry about loan defaults and foreclosures. These guidelines can be pushed with other compensating factors.
2. Credit:
Used for calculating risk of loan (interest rate).
3. Funds to close:
Can come from many different sources; e.g., seller carry-back, gift letter, equity.
Special Loans (http://www.special-loans.com) specialises in providing secured finance where banks will not. If you have credit problems, are fully employed or self-employed, have income issues or employment issues, we have the best solution for you! We provide Non-conforming home loans offering wholesale home loan rates as well as Standard Home Loans, unsecured personal loans, refinance products.
I fully realize if it sounds too good to be... Read More
Rising home prices, particularly on the East and West coasts... Read More
Perhaps you're a homeowner in need of some quick cash.Maybe... Read More
You should say goodbye to PMI. You may not notice... Read More
Most Americans tend to live on a paycheck-to-paycheck basis, and... Read More
Essentially there is little difference between the process that one... Read More
You can buy a home with a bad credit record;... Read More
A pension mortgage may seem lucrative at the first sight.... Read More
Refinancing your mortgage is one way to rebuild your credit,... Read More
With mortgage rates near 20-year lows, competition in the mortgage... Read More
Online home mortgage quotes are very similar to the quotes... Read More
A mortgage is a loan that is guaranteed by a... Read More
Today's real estate market is a volatile one; prices are... Read More
Texas was one of the last states to allow homeowners... Read More
A house is just that, a house, until someone lives... Read More
Today, FHA will loan up to 97 percent of the... Read More
Customers who opt for an interest only mortgage, and feel... Read More
There are numerous reasons a person has bad credit. Late... Read More
A Self-Certification mortgage is a mortgage designed for people who... Read More
It is likely to be one of the largest purchases... Read More
A 2nd mortgage is a secured loan on your property,... Read More
If you fall behind in your mortgage payments, you face... Read More
An adjustable rate loan, most simply stated, means that your... Read More
There are many benefits in choosing a remortgage, some of... Read More
At some point as you're writing out your rent check,... Read More
There are several advantages to getting mortgage pre-approval before looking... Read More
Most people choose a home owner loan as it can... Read More
When it comes to a reverse mortgage, wise consumers weigh... Read More
Homeowner - does this term catch your attention every time... Read More
One of the most important steps in the home buying... Read More
Do you have bad credit that you worry will stop... Read More
Owning your dream home need not just be a dream.... Read More
Buying your first house is always a difficult time. There... Read More
Most home owners know that the lower the interest rate,... Read More
Imagine this: you've found the perfect house, and feel lucky... Read More
If your mortgage company is threatening foreclosure, there are things... Read More
If you are self-employed, work on a contract basis, or... Read More
If you've got a few things around the house that... Read More
You have finally found the home of your dreams. You... Read More
The average home in the United States has a value... Read More
As is the case when applying for any mortgage, be... Read More
The search for quick homeowner loans can seem futile at... Read More
Before you apply for a hard money loan, try applying... Read More
Bridging finance is a short-term loan that is used as... Read More
Figures from the Council of Mortgage Lenders show that in... Read More
"You can save time and money by applying for a... Read More
With today's relatively low interest rates and climbing property values,... Read More
I have written many articles on refinancing a fixed rate... Read More
Your search for a mortgage isn't leading results.Check for any... Read More
The process of obtaining a mortgage or home loan can... Read More
If you are considering a new home loan anytime soon,... Read More
Your equity is the amount your home is worth, on... Read More
"Own your home free and clear in 3 to 4... Read More
Few of us invest the time and effort into researching... Read More
If you are transferring to the Kings Bay Georgia Naval... Read More
A pension mortgage may seem lucrative at the first sight.... Read More
Being a creature of habit can cost you plenty when... Read More
A tracker mortgage 'tracks' the Bank of England base rate,... Read More
The most basic distinction between types of mortgages that are... Read More
You may think that applying online for a mortgage is... Read More
If you have low income and are looking to get... Read More
My visit to the lender was interrupted with my wife... Read More
If you've got a wallet full of credit cards, and... Read More
It can happen to anyone, the roof is leaking, the... Read More
Are you excited about purchasing your first home? Or maybe... Read More
If you are a homeowner, it couldn't be easier to... Read More
Mortgage Refinance |