Fannie Mae Mortgage Loans - Advantages for Consumers

Many consumers have heard of Fannie Mae mortgage loans but have not taken the time to pursue them because they are not sure how these loans work and are unaware of the many advantages a Fannie Mae loan can provide them. It is well worth it to take the time to find out how a Fannie Mae loan works; particularly if you are in the market to purchase your first home.

The ease with which a loan applicant is able to obtain mortgage funding often depends on the health of the economy. When the Federal Reserve want to slow down or speed up the economy they limit the amount of money lending institutions are allowed to loan. This means that even if a loan applicant has perfect credit, if the Federal Reserve System has increased the amount of money banks are required to maintain in reserve; there may not be enough money available for the purpose of loans when you make your loan application. Doesn’t seem fair, does it?

The good news for consumers is that while they may not be able to obtain loans from the primary mortgage market during times when the Federal Reserve has limited loan funds, there are contingencies set up to allow persons to still obtain mortgage loans through the secondary mortgage market. This is where Fannie Mae comes in.

Fannie Mae, also known as the Federal National Mortgage Association, is a warehousing loan agency whose sole purpose is to work with lenders to make sure they don’t run out of mortgage funds for deserving consumers pursuing the dream of home ownership. One important point to realize is that Fannie Mae does not actually make the mortgage loan. Instead, Fannie Mae purchases the loan from the lender. This allows the lender to stay in compliance with the Federal Reserve regarding the amount of funds they have in reserve and it benefits consumers by allowing them to still borrow the mortgage funds they need. Fannie Mae then re-sells the loan to investors so that they can use those funds to assist other loan applicants with obtaining mortgage loans. Borrowers usually never notice their home mortgage has been sold, however; because the mortgage lender who originally made the loan usually continues to service the loan.

Persons interested in obtaining Fannie Mae mortgage loans should be aware that they may be required to meet Fannie Mae underwriting guidelines in addition to guidelines required by their mortgage lender. All in all, however; Fannie Mae can be wonderful avenue for pursuing mortgage loans when money is tight within the economy.