FNMA Loans

The basic idea behind Fannie Mae--to provide a government-supported entity to buy mortgages and thus free up funds for banks to make more mortgages--is a simple and sound concept. Together with the FHA, Fannie Mae and Freddie Mac (Federal Home Loan Mortgage Corp.) transformed the homeownership rate in this country from 44 percent in 1940 to over 66 percent in 2000.

The GSEs (Government Sponsored Agencies)provide a secondary market in home mortgages, purchasing mortgages from the lenders who originate them. They hold some of these mortgages, and some are "securitized" -- sold in the form of securities which the GSEs guarantee.

If you are a potential borrower eligible for a conforming loan, your interest rate will probably be about 1/4% lower than it would be absent the GSEs. This reflects their relatively low funding costs, part of which is passed through to borrowers.

In addition, if you are a low or low-to-moderate income borrower, and/or reside in an underserved area, you might find a loan through a GSE. As part of their public responsibility, the GSEs commit to purchase specified numbers of such loans. How many would not be made without the GSEs, however, is not clear.

As the nation has went through the housing boom and moved into the housing bust – no organization currently owns more homes than Fannie Mae. To help drive demand for home buyers to want to buy this inventory, Fannie Mae has come out with a special financing program called HomePath Mortgage Financing where people who buy homes currently owned by Fannie Mae can get a special deal on HomePath mortgage loans.

HomePath Loans: Advantages and Benefits

A few of the benefits of getting a HomePath loan from FannieMae when buying a home that is owned by FannieMae include:

• Low down payment
• Flexible mortgage terms including fixed-rate, adjustable-rate, or interest-only options
• Less than perfect credit is okay
• Get a HomePath loan whether you are going to live in the house or buy it as an investment
• Down payment (at least 3 percent) can be funded by your own savings; a gift; a grant; or a loan from a nonprofit organization, state or local government, or employer
• No mortgage insurance required on HomePath loans
• No appraisal required on HomePath loans
• HomePath Renovation Mortgage options available for homes that need repairs
• Many lenders to choose from to get a HomePath loan

HomePath Renovation Mortgage Loans

When a property goes into foreclosure and is given back to the lender, it is common for it to need a few repairs. For homes in this condition, Fannie Mae developed a special financing program called the HomePath Renovation mortgage loan and is available only for people who want to occupy a property as a primary residence.

Homepath Renovation Loan Benefits
Just a few of the benefits of the HomePath Renovation mortgage loan program include:

• Financing to fund both your purchase and light renovation
• Low down payment and flexible mortgage terms (fixed-rate or adjustable-rate)
• Down payment (at least 3 percent) can be funded by your own savings; a gift; a grant; or a loan from a nonprofit, state or local government, or employer
• Mortgage insurance is not required
• Several lenders offer HomePath Renovation Mortgage financing