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Differences between Freddie Mac and Fannie Mae
The most common names that you will come across in mortgage industry include the Fannie Mae and Freddie Mac. The importance of such companies is overlooked since people do get loan from them on first hand basis, but through secondary mortgages. Apart from ensuring that interests on loans are regulated so as not to rise too high, those two companies helps banks pull through their business in the industry. With the assistance of these companies, financial institutions are in a good position to offer mortgage loans. That is why you can find some banks with over 30 years term period for loans. Some loan lenders participate in a market where they sell such mortgage and it is those companies that buy such like mortgages. Those two companies were formed under government to ease with difficulties experienced in mortgage industry. The following are some of the distinct differences between the two companies despite their first impression similarities.
With the purpose of helping people acquire homes to live in irrespective of their of their backgrounds, the United State Government founded Fannie Mae in 1938. It was formed to help through low to high income earners. It started off by buying those loans that were insured by the government. In 1970, the United States government founded the Freddie Mac company to create a competitive industry. After its formulation, Fannie Mae was allowed to buy even those unprotected loans.
Freddie Mac company deals with considerably smaller institutions compared to those dealing with Fannie Mae company, such big institutions such as Bank of America, Chase Bank and more. Past records and credit score should be high for someone to deal with Fannie Mae. But with Freddie Mac, people with low credit may qualify for mortgage loans.
The two companies ask for down payment but of varied worth basing on their set terms and conditions. Down payment asked by Fannie Mae is calculated based on the rate of interests if fixed or inconsistent. On the other hand, Freddie Mac charge a flexible down payment ranging from three percent to five percent. Under completely different terms, the installment periods also differ.
To learn more info. about and do a better comparison of the two, click on the Fannie website’s link. There are a lot of benefits of these two companies and should be considered while making mortgage loans decisions. One of the decisions you going to make will be selecting which bank to borrow from. If you want to go big and deal with Fannie Mae, you should be having a good credit score and have borrowed from big banks. Interest rates will be regulated by such companies without affecting the banks operations in the industry.

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