What Is Fannie Mae and Freddie Mac?
Fannie Mae and Freddie Mac are operations sponsored by Congress that are crucial to the mortgage industry. These private-owned corporations buy mortgages from lenders and sell to investors. This helps provide stability, liquidity and affordability to the market. Essentially, they set the standard for home loans in the United States. Here is more information about Fannie Mae and Freddie Mac and how they can help you with your mortgage.Â
What Are the Differences Between Fannie Mae and Freddie Mac?
Fannie Mae and Freddie Mac are nicknames for the Federal National Mortgage Association and Federal Home Loan Mortgage Corporation, respectively.Â
While Fannie Mae and Freddie Mac provide similar services, there are a few differences between the two. For example, Fannie Mae typically purchases from commercial banks, and Freddie Mac typically purchases from smaller institutions. There are different borrower and loan program requirements as well.Â
The two operations also serve different purposes. Fannie Mae is much older than Freddie Mac and was originally established to give more loan funds when mortgages ran out during the Great Depression. Freddie Mac was chartered in 1970 to expand secondary mortgages.Â
What Are Some Fannie Mae and Freddie Mac Programs?
Both enterprises offer programs to buyers with low or moderate income. Some of the most popular Fannie Mae and Freddie Mac programs include:
1. HomeReady
This Fannie Mae program allows buyers to purchase or refinance their homes with just a 3% down payment. Buyers need a credit score of at least 620 to qualify, and private mortgage insurance is required until equity increases.
2. HomeStyle Renovation and HomeStyle Energy
Run by Fannie Mae, these two programs allow homeowners to borrow money to make renovations. HomeStyle Energy loans must be used to improve your home's structure or energy efficiency, and it can be combined with renovation loans.
3. HomePossible
This Freddie Mac program helps buyers who earn less than 80% of the area's median income. Similar to HomeReady, the down payment can be as small as 3% and can come from a variety of sources.
Your Central Florida Mortgage Experts
Whether you're looking into one of these programs or want to buy your home another way, Butler Mortgage is here to help. We've worked with both seasoned and first-time homebuyers in Central Florida for more than 25 years. If you need help owning a home, fill out our free consultation form or call us at 407-931-3800 to start your mortgage journey.
