What is a conforming fixed rate mortgage

What is Conforming Mortgage?

Conforming mortgage is a home loan that is eligible to be sold to the

Federal National Mortgage Association (Fannie Mae) or the Federal

Home Loan Mortgage Corporation (Freddie Mac). More on Fannie

Mae and Freddie Mac.

What is Non-conforming Mortgage?

Nonconforming loans are mortgages that fall outside of FNMA and

FHLMC acceptable guidelines, such as low credit scores, or

unacceptable property types. However, most are non-conforming

because the loan amounts are higher than those set by Fannie Mae

and Freddie Mac. Nonconforming loans larger than the conforming

loan limits are called "Jumbo" loans.

Why Conforming Mortgage?

Whether fixed rate or adjustable, 15-year term or

30, conforming

loans traditionally have the lowest interest rates available on the

home finance market.

What is Conforming Mortgage Rate?

Fannie Mae and Freddie Mac do not set the interest rates for

conforming mortgages. They only set the guidelines for conforming

loan products. Individual banks set their own conforming mortgage

interest rates and fees.

Why do Conforming Loans have the lowest rates?

Because banks can sell conforming mortgages to Federal National

Mortgage Association and the Federal Home Loan Mortgage

Corporation and immediately recoup their funds, they are not limited

by their market sizes or capital strength when it comes to making

conforming home loans. Small neighborhood banks can compete

Source: conformingrate.com

Category: Credit

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