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 dont 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 2005, a mortgage limit for a single-family dwelling is $359,650....
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