Understanding Freddie Mac And Fannie Mae Home Loans

By Joe R. Maldonado

Fannie Mae home loans as well as Freddie Mac were both founded by Congress in an attempt to add money to the housing market. Both of these companies give lenders the opportunity to get money for their mortgage investments via securities. Also, these companies are both government sponsored enterprises (GSEs).

Fannie Mae and Freddie Mac purchase mortgages from lenders. They then put them into packages and turn around and sell them to investors. What this does is essentially add liquidity to the market. Fannie Mae home loans mostly buy mortgages. Freddie Mac makes guarantees on loans and gets money from their fees. They arent the ones who directly give out the loans, but they are the insurance programs that make the loans more cost effective. They both operate only in the United States.

You will begin to see a big difference in the two companies if you own multiple properties. As a borrower, Freddie Mac will only allow you to have up to four units. With Fannie Mae home loans you can have up to ten properties.

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A second major difference between the two is that they each require you to have different amounts of money readily available at the time the financing is requested. With Fannie Mae you just need two months worth on hand. However, with Freddie Mac you have to have at least six months worth readily available. For those people who are purchasing investment properties, this can make or break their decision.

The two companies also differ when it comes to down payments. You can put down just three percent with Fannie Mae home loans. However, this is not the case at all with Freddie Mac. You cannot take out a loan with them for anything that goes above 95% loan to value. This essentially means that you will need to have at least 5% for your down payment. Both companies have special programs which can significantly lower the down payment in the event that the borrower meets the loan criteria.

The reason why Freddie Mac and Fannie Mae home loans have rules is so that home loans will be more affordable for people. These companies are simply meant to put more money into the housing market, period. They insure the loans that they purchase from the banks before they resell them out on the market.

Do not get these companies mixed up with the Federal Housing Administration. What they offer is totally different. The FHA actually directly offers the loans to people, while Fannie Mae and Freddie Mac do not. You can still be considered if you have a tarnished credit history, but you should expect to make a big down payment. You will also be charged a higher interest rate if you have a bad credit score.

After coming to the conclusion that you want to buy a house, it will be absolutely vital that you come to terms with your financing options. Most lenders will be happy to help you if you still do not understand the difference between Freddie Mac and Fannie Mae home loans.

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Do You Need A Permit For Bathroom Remodeling?

By Dave Robert

For some bathroom remodeling projects, you need more than just the right skills and a well thought-out planyou need your towns permission to start and complete the renovation. Often, a permit is required to ensure that any changes will meet current building, electrical, plumbing, and fire codes. This helps protect the homeowner from unscrupulous contractors, or violations of safety regulations that may result in accidental property damage or injury, or liability when the house is sold.

The building permit is obtained from your local municipal planning department and works in two stages: (1) approval of the initial remodeling plan; and (2) certification that all work has been done satisfactorily.

How do I know if I need a permit in the first place?

This is the major question most people have when it comes to bathroom remodeling. If you’re making minor changes that can be easily reversed, or if the buildings infrastructure and systems are not significantly altered, a permit probably isnt necessary. Major improvements, however, such as re-wiring, new plumbing, construction or demolition, generally require official permission before work begins. If in doubt, talk to the planning department first: in many municipalities, the building inspectors are more than willing to explain whats needed to do the job correctly.

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To obtain a permit, you or your contractor will be asked to complete some forms, and supply sketches or architectural drawings, that detail the work to be done and materials used. This plan will then be reviewed by the planning department to see if it’s structurally sound and up to code. If not, you will be asked to revise it. Permit fees vary according to the projects size and projected cost.

How to create a plan that will pass inspection

If youre a relative novice doing the work yourself, discuss your ideas first with a bathroom-remodeling professional, or someone at the planning department, or a knowledgeable neighbor whos already been through the process. Once youve worked out the details, get cost estimates for your materials and any needed tools by checking out prices with local or online merchants. Any cost cutting your budget requires should not be at the expense of satisfying code requirements. Otherwise, your permit will not be issued.

If you hire a licensed contractor to do the work, he or she can help you fill out the permit application, or on large renovations, file it for you as part of the job.

The second stage of the approval process comes before the finishing work begins: the major alterations are complete but still exposed to view. An inspector comes to the site to see if everything has been done according to plan. If not, further modifications will be necessary before the project is approved.

At the end of your project, youll hopefully have added beauty, convenience, and value to your home. Youll also have the security, obtained through the permit-approval process, of knowing that the safety of your loved ones and possessions has been assured as well.

About the Author: Dave Robert is a district sales manager at Discount Bathroom Vanities Publishing, and an avid fixer-upper whos been restoring old houses for more than twenty years. Readers can tap into Daves knowledge about home remodeling, and kitchen and bathroom design, at:




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