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 2005, 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 2005 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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