Question:

Are the non-conforming mortgage rates higher than conventional loan rates?

Answer:

Generally yes, non-conforming mortgage rates are higher than the interest rates of conventional home loans. This is because nonconforming mortgage loans are considered riskier.

When you choose a conventional mortgage, you are obliged to disclose a considerable amount of financial information in order to get approved for the loan. Additionally, the amounts you are allowed to take out as a loan are smaller and much reasonable, and therefore the lender can rest assured that the chance of foreclosure is smaller too. Hence, conventional mortgages generally have lower rates than the non conforming mortgage rates.

Additionally, you should expect that mortgage insurance on your nonconforming home loan would be also more expensive compared to conventional loans.

While nonconforming loans do have their risks and shortcomings, they can turn out to be a great option for certain borrowers, so don't hurry up to completely turn them down just because of the higher non-conforming mortgage rates if your particular situation does not allow you to get a conventional loan.

Mortgage rates hit their lowest since 1955. Ask the home loan experts we recommend Quicken Loans how to take advantage of them.
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