Fannie Mae And Freddie Mac Mortgage Loans Conforming Loans Provide Low Interest Rates

Fannie Mae And Freddie Mac Mortgage Loans - Conforming Loans Provide Low Interest Rates
Conforming loans provide low interest rates since they are almost guaranteed to​ be purchased by Fannie Mae or​ Freddie Mac,​ which allows more funds to​ be available for borrowers .​
However,​ these corporations have terms,​ such as​ maximum loan,​ that limit how much you​ can borrow .​
If you​ don’t meet their terms,​ you​ will need to​ apply for a​ non-conventional loan with slightly higher interest rates.
Loan Purchasers
Fannie Mae and Freddie Mac are stockholder owned companies that purchase mortgages,​ package them into securities,​ and then resells them to​ investors .​
This allows banks and other financing companies to​ lend to​ more customers since their capital is​ not tied up in​ long-term loans.
Fannie Mae and Freddie Mac have strict requirements for purchasing loans .​
Basically,​ they want to​ reduce their risk level so they put a​ cap on​ loan amounts,​ credit score,​ income level,​ and down payment.
Conforming Loan Amounts
Each year Fannie Mae and Freddie Mac create new guidelines for loan amounts .​
In 2018,​ a​ mortgage limit for a​ single-family dwelling is​ $359,​650 .​
Limits for multiple family dwelling are significantly higher,​ roughly an​ additional $100,​000 per family .​
Maximum loan amounts are also 50% higher in​ Alaska,​ Guam,​ Hawaii,​ and the​ Virgin Islands since property prices are higher.
Second mortgages also have their limit .​
In 2018 the​ limit was $179,​825,​ but the​ total mortgaged amount of​ both loans could not exceed $359,​650 .​
As with first mortgages,​ second mortgages can also be 50% higher in​ designated areas.
Non-Conforming Loans
There are other loan options if​ you​ don’t qualify for a​ conforming loan .​
If you​ need to​ borrow more than the​ maximum conforming loan amount,​ then you​ will want to​ apply for a​ jumbo loan .​
Because these types of​ loans are handled on​ a​ smaller scale,​ their rates are slightly higher than a​ conforming loan.
If you​ have poor credit or​ little down payment,​ you​ can use a​ subprime lender who specialized in​ lending to​ B/C type loans .​
You can expect to​ pay higher rates with these lenders,​ but many offer favorable terms .​
To find the​ best deal and to​ avoid scams,​ you​ must research your lender .​
Compare rates and terms until you​ find a​ favorable financing package.

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