Fannie Mae and Freddie Mac are corporations owned by stockholders that purchase mortgages and then resell them to investors. Because this ensures that the borrowers capital is no longer tied up in the loan, banks and other lenders are able to grant more money to their customers. What Fannie Mae and Freddie Mac do with the mortgage once they buy it is put a cap on the amount of the loan, the credit score, income level, and down payment so they reduce their risk involved in the investment.
Lets say that as a borrower, you dont qualify for an aforementioned conforming loan, and you need to borrow more than the maximum amount imposed by the cap. In this situation, you should apply for what is known as a jumbo loan, which are typically handled on a smaller scale, and therefore carry higher rates.
If you are suffering from bad credit, you can also use a subprime lender who specializes in these types of financial situations. As always, before selecting a deal, you must do research. Learn as much as you can about the lender as his terms until you can safely choose the most favorable plan for you.
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Gregrey Pashby is a writer and contributor for Bad Credit Lender who specialize in bad credit loans and hard money loans. Located in La Jolla, California, Bad Credit Lender provides competitive private Bad Credit Articles, bad credit home loans, and bridge loans. In addition, Greg is one of the main contributors to the Coastal La Jolla Funding -- A California Hard Money Lender.