Fannie Mae and Freddie Mae are quasi-government agencies in that they are publicly-owned, but overseen by the government.
The purpose of Fannie and Freddie is to make sure that money is available to homeowners that want home loans.
Neither lends to consumers directly, though; you'll have to talk to your loan officer at the Gary McNinch Team for that. Instead, Fannie and Freddie's role is to buy loans from lending institutions that make loans to everyday people, like those of us who live and work at places like Boeing, Ikea, Valley General Hospital, Renton School District, City of Renton or Southcenter.
For example, all banks in America abide by laws limiting the amount of money they can lend as a percentage of their total asset base. If your home loan is on the books of Bank ABC, Bank ABC is, therefore, restricted in issuing additional loans because your loan counts against that ratio.
But, if Bank ABC sells the loan to Fannie Mae or Freddie Mac, your mortgage converts back into cash and Bank ABC can then lend again to somebody else.
Because of Fannie and Freddie, a bank can lend to multiple homeowners using the same asset base, thereby making sure that "the system" has plenty of money available for homeowners in need of loans.
In this sense, both Fannie and Freddie keep mortgage money flowing on the street level. Whether it be homes in Fairwood, Skyway, Newcastle, Kennydale, Renton Highlands or Downtown Renton. But it only works to a point. Fannie and Freddie have very strict guidelines about what types of home loans they will purchase from banks and only accept loans that conform to their respective criteria.
Loans falling outside the criteria, by contrast, will not be purchased by the agencies. This is why some mortgages are called "conforming" loans -- they conform to Fannie or Freddie's guidelines. The other loans fall into the categories of "Alt-A" or "sub-prime".
This also explains why Alt-A and sub-prime loans are harder to come by lately -- there's no government agency that guarantees to purchase these types of loans. Without that guarantee, banks are largely unwilling to tie up space on their balance sheets.
There are many great loan programs available and the Gary McNinch Team in Renton has the right loan officers to get you preapproved and ready for a purchase. It is important to know what "monthly investment" (payment) you are comfortable with. A great loan officer will show you the options and discuss them so that you can make the best decision.
Click on the FREE PREAPPROVAL LINK of www.RentonHomeFinder.com for a confidential approval. Thank you!
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