Fannie Mae and Freddie Mac
Fannie Mae and Freddie Mac are corporations owned by stockholders that purchase mortgages and then resell them to investors. Because this ensures that the borrower’s capital is no longer tied up in the loan, banks and other lenders are able to grant more money to their customers. What Fannie Mae and Freddie Mac do with the mortgage once they buy it is put a cap on the amount of the loan, the credit score, income level, and down payment so they reduce their risk involved in the investment.
General Loan Information
Let’s say that as a borrower, you don’t qualify for an aforementioned conforming loan, and you need to borrow more than the maximum amount imposed by the cap. In this situation, you should apply for what is known as a jumbo loan, which are typically handled on a smaller scale, and therefore carry higher rates.
If you are suffering from bad credit, you can also use a subprime lender who specializes in these types of financial situations. As always, before selecting a deal, you must do research. Learn as much as you can about the bad credit lender as his terms until you can safely choose the most favorable plan for you.