What Is a Freddie Mac Mortgage

Written by on January 9, 2012 in Government Mortgage Loans - No comments
Understanding A Freddie Mac Mortgage

Freddie Mac is a company that Congress established in 1970 for the purpose of providing liquidity and stability to the home housing markets in the country and to provide affordability for homeowners. This government sponsored entity has helped millions of Americans be able to own a home.

When Freddie Mac was first established, it was meant to give Fannie Mae some competition. The company primarily purchases mortgages in the secondary market, as they buy mortgages from financial companies (banks, mortgage lenders, etc.) so that those institutions can replenish their money supply so they can keep lending more money in the form of new mortgages. The corporation is sponsored by the government.

After this type of loan is purchased from the lender, the corporation sells them to investors. There are insurance programs that make the cost more affordable, and they are only available in the United States.

A Freddie Mac mortgage sometimes carries slightly higher closing costs than other types of mortgages. To obtain s Freddie Mac mortgage you may not need excellent credit, however your credit score still needs to be at least 620.

You cannot get a loan above a 95 percent loan to value; therefore, borrowers need to have a 5 percent down payment on the loan. However, programs are available to lower the down payment if needed. With a Freddie Mac mortgage, you are not permitted to own more than four properties.

Before applying for a Freddie Mac loan, your mortgage banker or loan officer will need to gather the proper documents from you.  You will need to provide proof of income, copies of bank statements and a list of all of your assets. They will order a copy of your credit report. A lender will pre-approve you for the loan and then underwriters will make the final approval decision.

Refinancing is also available. If you have been making on-time payments for a year, have a solid credit score, and your equity is appropriate, you may be eligible for refinancing.

The purpose of the company is to put more money into the mortgage market. Before they resell the mortgage, they insure the loan from the bank. The company does not directly provide people with a loan. This type of loan can provide you will an affordable way to become a homeowner, and you can live happily in your new home.


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