Agency Loans- Fannie Mae/Freddie Mac
The majority of all first lien mortgages offered in the United States are underwritten according to the guidelines of either the Federal National Mortgage Association, commonly known as Fannie Mae, or those of the Federal Home Loan Mortgage Corporation, known as Freddie Mac. Because these loans “conform” to these agency guidelines they are often referred to as “conforming” loans.
After the mortgage crisis of 2008, most lenders sell their loans to these agencies after the loan closes. In cases where the lender does not intend to sell the loan to one of these agencies after closing, they often still underwrite the loan to these agencies guidelines in order to facilitate a quick sale in the event that they may wish to sell the loan in the future.
Benefits of Agency Loans
Low interest rates
Conventional loans (non-government guaranteed or insured) that conform to agency guidelines offer some of the lowest interest rates found in the marketplace.
Low down payment
A minimum down payment of 3% of the purchase price or appraised value (whichever is lower) is all that is required of qualified borrowers. Although PMI (either lender paid or provided by a PMI company) is required if the down payment is lower than 20%.
Agency loans can be obtained on primary residences, second homes and 1-4 unit investment properties by qualified borrowers.
High loan limits
Currently, in South Carolina the maximum loan limit on a conforming loan is $647,200.
Many interest rate options
Qualified borrowers can choose between a fixed rate for the full term of the loan or a lower starting interest rate available with an Adjustable Rate Mortgage (ARM) with an initial fixed rate period of 3, 5, 7 or 10 years before the rate can change.
At First Nations Home Mortgage we are experts on Fannie Mae and Freddie Mac guidelines. Call us today for a free consultation to learn if a conforming loan is the right loan for you.