For instance, Fannie Mae offers the HomeReady loan, whereby borrowers can’t earn more than 80% of the median income in the area. Lending Programsįannie Mae and Freddie Mac differ in their lending programs and requirements. Freddie Mac and Fannie Mae have their own guidelines in terms of mortgage approval and qualifying borrowers. Mortgage Approval QualificationsĪll loans backed by these entities are generally conventional loans, which are mortgages that are not backed by the government. While Fannie Mae purchases mortgages from larger banks, Freddie Mac purchases them from smaller financial institutions. The main difference between Fannie Mae and Freddie Mac is where they source their mortgages from. How Do Freddie Mac and Fannie Mae Differ? Mortgage Sources
Freddie, Fannie and the Federal Housing Administration together now guarantee about 90 percent of all new mortgages, far above their historic level. They influence mortgage interest rates and the availability of home loans.If your mortgage is owned by Fannie Mae or Freddie Mac, you may be able to refinance your loan and take advantage of lower interest rates. They are key players in the government’s Making Home Affordable foreclosure-prevention program.They contributed to the financial crisis and real estate downturn, by loosening underwriting standards, buying and guaranteeing risky loans and increasing purchases of mortgage-backed securities.How Do Fannie And Freddie Impact Real Estate? In 2008, due to mismanagement resulting in billions of dollars of losses, Fannie and Freddie were taken over by the government. They buy mortgages from lenders, so the lenders can use the money to issue new home mortgages. They were originally created to raise homeownership levels and increase the availability of affordable housing.įannie and Freddie don’t sell mortgages directly to homeowners. Freddie Mac is the Federal Home Loan Mortgage Corporation. Who Are Fannie Mae And Freddie Mac?įannie Mae is the Federal National Mortgage Association. If you’re ready to buy a home and are looking to apply for a mortgage, you may want to learn more about these entities and how they can impact how much your mortgage will cost you.
Ready to Apply For a Mortgage in WA, OR, CO, or ID?įannie Mae and Freddie Mac have been in the news quite a bit over the past few years, so it’s a good time to do a refresher on who they are and what role they play in the real estate market.How Do Freddie Mac and Fannie Mae Differ?.How Do Fannie And Freddie Impact Real Estate?.
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