Why No One Talks About Anymore

Fannie Mae and Freddie Mac are differentiated in the Following Ways
In mortgage industry, you are most likely to encounter these two common companies, Fannie Mae and Freddie Mac. People tend to overlook the importance of such companies due to the fact that they do not extend loans to borrowers. Most banks are able to maintain their business operations with the help of the two companies, that is in addition to ensuring that interests from loans do not rise too high. With the assistance of these companies, financial institutions are in a good position to offer mortgage loans. That is why you can find some banks with over 30 years term period for loans. Those companies take part in those markets where mortgage loans are being sold, by buying those loans, banks will be able to recover their money and continue with their business. Those two companies were formed under government to ease with difficulties experienced in mortgage industry. However similar they may look, the two companies have distinguishable differences and some few of them are listed below.
Fannie Mae was founded by the United States Government in 1938 with its main purpose being to help people irrespective of the backgrounds to get a home to live in. The company benefited all through the low income earners to high income earners. The company was restricted to buying mortgage which was under protection cover by the government. Freddie Mac was founded much later in 1970 to promote competition in the mortgage industry. After its formulation, Fannie Mae was allowed to buy even those unprotected loans.
Freddie Mac company deals with considerably smaller institutions compared to those dealing with Fannie Mae company, such big institutions such as Bank of America, Chase Bank and more. Past records and credit score should be high for someone to deal with Fannie Mae. On the other hand, people with poor credit score may be eligible for loans from Freddie Mac.
The two companies ask for down payment but of varied worth basing on their set terms and conditions. Interest rate can be fixed or varied, this strongly form the basis for down payment calculation for the Fannie Mae. Basing on the different terms set by Freddie Mac, their down payment varies between 3 to 5 percent. The installment periods too do differ under completely different terms.
Click on the Fannie website’s link to learn and discover more info for basis of comparison. There are a lot of benefits of these two companies and should be considered while making mortgage loans decisions. Selecting a bank to borrow from is among the decisions you will have to make. For those dealing with big financial institutions, their choice will be Fannie Mae. Interest rates will be regulated by such companies without affecting the banks operations in the industry.