There are two large companies that guarantee most of the mortgages in the U.S. They are the Federal National Mortgage Association (FNMA) known as Fannie Mae, and the Federal Home Loan Mortgage Corporation (FHLMC) or Freddie Mac. In 2008, following the most serious financial crisis since the Great Depression, the U.S. government took over operations of both.
By guaranteeing loans, Fannie Mae and Freddie Mac reduce the risk to the lenders who make loans, making loans more affordable and more widely available. Fannie Mae and Freddie Mac mortgages are both known as conventional loans, and in order to qualify, certain criteria must be met. While Fannie Mae and Freddie Mac share many similarities, there are also some notable differences.
Both Fannie Mae and Freddie Mac buy mortgages from lenders and hold the loans in their portfolios or package the loans to be sold. This ensures a stable supply of mortgage money, expanded pool of funds available, and reduced interest rates for borrowers. Fannie Mae purchases mortgages from larger banks, whereas Freddie Mac acquires them from smaller ones.
Fannie Mae was created in 1938 during the Great Depression. Its primary purpose is to provide accessibility to affordable financing through vehicles such as the 30-year, fixed-rate mortgage that provides homeowners with predictable mortgage payments over the life of the loan. Fannie Mae also offers affordable loan products such as refinancing loans to renovate or rehab homes, and mortgages with down payments of 3 percent or less to credit-worthy, low-income borrowers with limited cash who are looking to purchase or refinance.
In 1970 Freddie Mac was founded with the focus of purchasing loans from lenders to restore their supply of funds so that lenders can make more mortgage loans to other borrowers. Freddie Mac offers a huge variety of mortgage products for a multitude of borrowers including very-low to low-income borrowers, renovation loans, first-time home buyers, refinance and cash-out refinancing, second mortgages and many, many more options.
At 1 Stop Lending, we work tirelessly to find the best loan for you. After nearly two decades in the industry, you can rest assured that we are knowledgeable professionals with the expertise and attention to detail that you deserve.
If you are interested in learning more about the best mortgage available for you, we are just one phone call, text or email away from answering any questions you have. Please visit https://1stoplending.net for more.