Home Ready Mortgage Program – Fannie Mae
In the United States, thousands of borrowers apply and obtain mortgages on a daily basis, such as to the Home Ready Mortgage Program. One of the standard types of home loans is a conventional mortgage.
Conventional mortgages are residential mortgages that meet traditional credit and lending standards outlined by Fannie Mae or Freddie Mac.
Many borrowers may have a conventional mortgage without even realizing it. In fact, there is a strong likelihood that, if you have a conventional mortgage, that your loan was purchased by Fannie Mae.
Fannie Mae offers a variety of mortgage financing solutions that borrowers can take advantage of, including Home Ready, their affordable lending solution. New Century Mortgage is pleased to offer borrowers the option of utilizing Home Ready for your next purchase or refinance among its suite of affordable mortgage options.
Let’s dive into a brief overview of who Fannie Mae is, as well as outline how Home Ready might be a program to consider for your next purchase or refinance.
Fannie Mae: A Brief History
The government sponsored entity (GSE) known as Fannie Mae was created by Congress back in 1938 with the mission to provide liquidity to the housing and mortgage markets by purchasing loans from banks and other lending institutions.
Its main competitor is Freddie Mac, another government sponsored entity (GSE) which was created to compete with Fannie Mae. Both aggregators purchase loans and package them into financial instruments referred to as mortgage-back securities that go on to be sold to investors.
In late 2008, both Fannie Mae and Freddie Mac entered into conservatorship under the authority of the Federal Housing Finance Agency (FHFA) as a result of the financial crisis.
Fannie Mae has certainly recovered over the last decade from those once turbulent times as demand for homeownership increased substantially. Thus, allowing the housing and mortgage markets to grow and recover. Demand has also been fueled by the need for and desire for additional affordable lending programs.
As a response to the market, Fannie Mae launched its affordable lending program known to many as Home Ready.
Home Ready Mortgage Program – Affordable
Fannie Mae’s Home Ready program is essentially a flexible and affordable loan program for credit-worthy, low income borrowers looking to purchase a new home or refinance an existing mortgage loan.
One of the biggest advantages of the Home Ready program is that borrowers can put less down on a home than a standard conventional product, which is also lower than FHA’s minimum down payment requirement.
Borrowers can also utilize other qualified down payment assistance programs in combination with Home Ready.4 The funds you receive from assistance programs are also not limited to one source. You can even use personal gifts for your mortgage transaction or have a seller contribute to your closing costs to make the deal even more affordable.
Home Ready Mortgage Program – Benefits
Other ways that borrowers can benefit are for loans that require private mortgage insurance. Home Ready allows for reduced mortgage insurance coverage, meaning a lower monthly premium that borrowers have to pay. The mortgage insurance is also cancellable, provided certain thresholds and restrictions are met.
Borrowers with higher credit scores that can qualify for other conventional programs. However, they may also benefit in some cases by obtaining more favorable risk-based pricing through the Home Ready program.
While Home Ready can benefit first-time homebuyers looking to put less down on a home, it is available to repeat homeowners as well.
In conclusion, if you want to learn more about Fannie Mae’s Home Ready program? New Century Mortgage can answer all your Home Ready related questions.