Understanding Fannie Mae and Freddie Mac

 

Many first time home buyers in Coral Springs, FL have heard about Fannie Mae and Freddie Mac home loans, but they don’t quite understand how they are involved in the lending process. Fannie Mae and Freddie Mac aren’t direct lenders. However, both of these lenders have an impact on how Americans can buy homes. Lenders actually receive funds from Fannie Mae and Freddie Mac. They use these funds to lend buyers the money to buy homes. They then package these loans and sell them to investors. The money made on these loans is used to buy more mortgages. This is the process that enables lenders to have the continual ability to lend money to home buyers.

When Fannie Mae and Freddie Mac put money into the mortgage market, they make it easier for buyers to get a home loan. Historically, banks were the only lenders for home loans, and they used their own funds for mortgages. Banks used to get all of their funds from the money they made from their community, the amount of money they had depended on the economic status of their community. With the participation of Fannie Mae and Freddie Mac, the ability to get a home loan is the same regardless of where you may live. Additionally, Fannie Mae and Freddie Mac keep mortgage interest rates lower.

What is Fannie Mae?

Fannie Mae loans began in 1938. It was created by the United States Congress. They went private in 1968; however, Congress still oversees their operations. The motto of Fannie Mae states: “We are in the American Dream Business.” Fannie Mae’s assets are the second largest in the United States. They also provide the largest amount of money for mortgages in the U.S. Coral Springs, FL residents are able to obtain home loans easier because of the fresh capital that Fannie Mae provides. Fannie Mae offers a special program that only requires interest payments on a mortgage for 10 to 15 years. Additionally, they offer programs for people to get home loans with a relatively small down payment. Today, they are very determined on helping the families and homeowners who are struggling. Moreover, they are keen on supporting families to avoid foreclosure and help them keep their houses in any way possible.  Fannie Mae remains to serve America’s families and the whole housing market and they have been doing this for more than 70 years now.

What is Freddie Mac?

Freddie Mac buys and resale mortgage in the same way that Fannie Mae does. It is owned by shareholders while under the supervision of the government. Freddie Mac competes with Fannie Mae home loans. Freddie Mac offers special loan programs that are similar to Fannie Mae’s special loans. They offer mortgages with zero down payments, low down payments and mortgages for people who are still building their credit histories.

Freddie Mac has facilitated over 41 million home purchases in the United States. There are millions of people who have been able to take advantage of lower interest rates because of Freddie Mac’s help. With both Fannie Mae and Freddie Mac’s participation in the home lending process, more people in Coral Springs, FL are able to purchase homes at affordable interest rates and lower down payments. Ace Mortgage & Loan Corporation can help you understand how Fannie Mae and Freddie Mac operate. We will be happy to assist you with any questions you may have in the home lending process. 

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