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Conventional loans. |
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Conventional loans may be conforming and non-conforming. Conforming
loans have terms and conditions that follow the guidelines set forth by
Fannie Mae and Freddie Mac. These two stockholder-owned corporations
purchase mortgage loans complying with the guidelines from mortgage
lending institutions, packages the mortgages into securities and sell
the securities to investors. By doing so, Fannie Mae and
Freddie Mac,
like Ginnie Mae, provide a continuous flow of affordable funds for home
financing that results in the availability of mortgage credit for
Americans. Fannie Mae and Freddie Mac guidelines establish the maximum loan amount, borrower credit and income requirements, down payment, and suitable properties. Fannie Mae and Freddie Mac announces new loan limits every year. The 2008 conforming loan limits are: One-family: $417,000 Two Unit: $533,850 Three Unit: $645,300 Four Unit: $801,950 Loans above the maximum loan amount are also known as 'jumbo' loans. Such loans often have a little higher interest rate than conforming because they are bought and sold on a much smaller scale. Loans that do not meet the borrower credit requirements are called 'B','C' and 'D' paper loans vs. 'A' paper conforming loans. |