Paterson Mortgages & Loan Information
Conforming and Nonconforming Loans
The term "conforming," as opposed to "nonconforming,"
is sometimes used to explain loans that offer terms and conditions that
follow the guidelines set forth by Fannie Mae and Freddie Mac. These
are the two private, congressionally chartered companies that buy mortgage
loans from lenders, thereby ensuring that mortgage funds are available
at all times in all locations around the country.
The most important difference between a loan that conforms to Fannie
Mae/Freddie Mac guidelines and one that doesn't is its loan limit. Fannie
Mae and Freddie Mac will purchase loans only up to a certain loan limit
(currently $227,150, but will be $240,000 as of January 1, 1999).
If your loan amount will be for more than the conforming loan limit,
the interest rate on your mortgage may be higher or you may have slightly
different underwriting requirements, particularly in regard to your
required down payment amount. Check with your lender about this if you
are taking out a large loan amount.
Nonconforming loans are sometimes called jumbo loans. For more information
contact our Paterson mortgage specialists.