Fannie Mae and Freddie Mac: The good, bad and ugly for owner builder loans
With the ongoing struggles of the housing industry, the government finally decided to intervene and save struggling mortgage giants Fannie Mae and Freddie Mac Just like your ability to get this rescue, a construction loan owner? Good owner builder loans are construction loans for permanent adjustment of the permanent mortgage financing to start construction permit. Because Fannie Mae and Freddie Mac have been virtually the only source of funding for banks and other lenders to make your house looking for housing loans, this means that created Fannie and Freddie rescue some changes good and bad for you , the owner builder. The official government train was to create a conservatorship, the government assigned personnel are taking the place of Fannie and Freddie media management to create. In other words, the government assigned managers, in charge of these two titans of the mortgage industry, including U.S. $ 5 trillion in home loans that back now. As an owner builder may be wondering what all the fuss about Fannie and Freddie. How will they work? Why affect mortgage loans for many in the U.S.? Here is why: banks loan money to homebuyers. Then, these banks sell the mortgages Fannie Mae or Freddie Mac Banks then use the money they receive from the sale of mortgages to make new loans. Fannie and Freddie, meanwhile, bundle those loans, attach a payment guarantee to them, and sell them as bonds. In fact, the government created Fannie and Freddie for the specific purpose of promoting and supporting the mortgage industry. The two mortgage banks are technically private property, if government-sponsored enterprise (GSE) of the United States. Both Fannie Mae and Freddie Mac have fought hard over the past year because of falling property prices and rising foreclosure rates. Well, so far with the guidance of government, what does this mean for loan owner construction loan? Let’s start with the good. The good news for owner builder loans is that qualified borrowers better see their mortgage rates permanent. As mentioned above, the loans are good owner builder loans are designed to build permanent, ie the borrower has a loan to cover only completed during the construction phase and conversion of the permanent mortgage when the house finished. For owners of the financing of a construction loan the borrower turn over rate permanent mortgage when construction was completed in the house. With the government bailout of Fannie and Freddie, these highly qualified borrowers could see their 30-year fixed rate fell substantially. The rate during construction probably will not be as affected, but the long-term sustainable rate is the most important rate anyway. So that’s the good news. What is the bad news? The bad news for owner builder loans is that the guidelines will probably get even stricter as Fannie and Freddie struggle to eliminate each mortgage as risky. Therefore, an owner builder may see tighter requirements for debt, income taxes, or slightly larger for the required payments. However, looking at the picture, it is important to note that holders of construction loans, which are still available. It would have been much worse. But with the government bailout of Fannie and Freddie, which is generally good news is that owner builder lending will continue. The guidelines could be a little stricter, but strong borrowers will see better rates on their mortgages permanent. Borrowers with weaker credit scores below 700, can be useful during the time spent working, planning on increasing their credit ratings. This will help your chances of approval and definitely help their rates. If you are in this category with its owner builder loan officer to talk about some credit repair options.