Guidelines for Fannie Mae Loans
Fannie Mae is a privatized institution created in 1938 to help the mortgage market recover after the Great Depression. Fannie Mae lends money to banks to help originate loans in a conventional loan (secondary) market. This institution earns its money by charging consumers a monthly mortgage insurance fee to help cover costs and losses associated with default and foreclosures. While the guidelines for Fannie Mae loans might not be as stringent as government-backed and insured underwriters, they still must adhere to a set of guidelines for approval.
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Loan Types
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Fannie Mae will underwrite loans for primary residence homes, secondary homes, vacation homes or investment properties. However, the guideline is that Fannie Mae will only grant loans to individuals. Partnerships or corporations do not qualify.
Co-Borrowers
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While many types of federal loans will not allow a co-borrower, Fannie Mae will underwrite loans that require a co-borrower, providing that their income is not needed in order for the primary purchaser to qualify. If the income is required, the co-borrower will have to sign off on all loan documentation, as well as the contract for the property, and will be known as a co-owner, with a vested interest in the purchase.
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Loan Limits
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Fannie Mae sets loan limits for purchase of a property, and they change every year. Typically they range from $400,000 to $1 million, depending on the market area.
Credit Restrictions
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Fannie Mae will not grant loans to subprime borrowers, which refers to those whose credit score is less than 620 or who have had any recent late payments, collections or charge-off accounts.
Considerations
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Fannie Mae guidelines state that interest rates are based on a consumer's credit score. Lower interest rates and more favorable repayment terms are granted to individuals who have a credit score above 750 points.
Misconceptions
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Many borrowers believe that conventional loans all come with an adjustable rate. This is not the case, as many conventional loans underwritten by Fannie Mae are based on fixed rates and are set by the mortgage market.
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Comments
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have a primary home, had auto accident, on permanant disability, collect social security, had to file bankruptcy, laywer said to include home, tried to get involved with goverment programs, bank that services loan denied me, said no programs to offer, keep listening to news, says different, not sure if bank that services loan, don't trust that bank because of other issues, they lied to myself and other people I came in conversation with, not a trust worthy bank, not sure who else could speak to,? would like to keep home, any advise?
