Lender · Warner Robins, GA · Member since 2012 · 38 posts · 16 votes
11y
Ok, here it goes...
Both Fannie Mae (FNMA) and Freddie Mac (FHLMC) are similar in their mission-- to provide liquidity, stability, and affordability to the mortgage market.?
They do this by purchasing residential mortgages that conform to certain standards from lenders, and then either hold these mortgages or use them to issue MBSs to be traded in the capital markets. This allows them to provide access to funds (on reasonable terms) to banks, savings & loans, and mortgage companies so these lenders can continue lending money for mortgage loans w/out using their depositors funds.
Fannie & Freddie do not insure mortgage loans; they purchase them.
The Federal Housing Administration (FHA) insures mortgage loans made by FHA-approved lenders. The FHA insures lenders against default by charging monthly mortgage insurance to the mortgagor, which in turn, allows lending guidelines to be more relaxed.
VA loans are only for veterans (or surviving spouses) and are fully guaranteed by the Dept of Veteran Affairs. The VA insures loans at no cost to a veteran buyer (other than the VA funding fee), whereas FHA insures loans by charging the mortgage insurance to the mortgagor.
Investor · Dallas, TX · Member since 2014 · 2k+ posts · 1k+ votes
11y
FHA, Fannie/Freddie, and VHA are all variations on the same theme. They all make it easier for people to purchase property, generally with much lower down payment requirements, by providing government "insurance" against borrower default. The VHA program is only available to active duty or honorably separated veterans of the armed forces.
Real Estate Investor · Philadelphia, PA · Member since 2014 · 8 posts · 4 votes
11y
I just wanted to add to Hattie's comment - programs through FHA, VA and USDA are typically only geared for properties that will be owner occupied after settlement. There may be exceptions to this rule from time to time but generally speaking, these are owner occupied programs only.
Lender · Warner Robins, GA · Member since 2012 · 38 posts · 16 votes
11y
Ok, here it goes...
Both Fannie Mae (FNMA) and Freddie Mac (FHLMC) are similar in their mission-- to provide liquidity, stability, and affordability to the mortgage market.?
They do this by purchasing residential mortgages that conform to certain standards from lenders, and then either hold these mortgages or use them to issue MBSs to be traded in the capital markets. This allows them to provide access to funds (on reasonable terms) to banks, savings & loans, and mortgage companies so these lenders can continue lending money for mortgage loans w/out using their depositors funds.
Fannie & Freddie do not insure mortgage loans; they purchase them.
The Federal Housing Administration (FHA) insures mortgage loans made by FHA-approved lenders. The FHA insures lenders against default by charging monthly mortgage insurance to the mortgagor, which in turn, allows lending guidelines to be more relaxed.
VA loans are only for veterans (or surviving spouses) and are fully guaranteed by the Dept of Veteran Affairs. The VA insures loans at no cost to a veteran buyer (other than the VA funding fee), whereas FHA insures loans by charging the mortgage insurance to the mortgagor.
Investor · Kansas City, MO · Member since 2013 · 465 posts · 170 votes
11y
one more note the VA loan does not issue the loan, they only insure the loan. You still have to get approved by the bank and the VA before they will loan you the money.
@Nick Williamson thank you for writing that out for me, I have been going over your post time and time again trying to gain better understanding of everything you informed me of
If the veteran borrower dies before their mortgage is paid in full "...the surviving spouse or other co-borrower must continue to make the payments. If there is no co-borrower, the loan becomes the obligation of the veteran's estate."
@Amanda Keller So basically a VA loan is treated the same as a conventional mortgage would be treated if the borrower died (i.e., all outstanding financial obligations, including the mortgage, become the financial responsibility of the surviving spouse or the veteran's estate.)
Real Estate Investor · Philadelphia, PA · Member since 2014 · 8 posts · 4 votes
11y
This would be for applying, not if the loan was already in effect.
VA has a few interesting rules around spouses of surviving Veterans. Here's an excerpt directly from the VA's site regarding surviving spouses:
Spouses
The spouse of a Veteran can also apply for home loan eligibility under one of the following conditions:
Unremarried spouse of a Veteran who died while in service or from a service connected disability, or
Spouse of a Servicemember missing in action or a prisoner of war
Surviving spouse who remarries on or after attaining age 57, and on or after December 16, 2003 (Note: a surviving spouse who remarried before December 16, 2003, and on or after attaining age 57, must have applied no later than December 15, 2004, to establish home loan eligibility. VA must deny applications from surviving spouses who remarried before December 6, 2003 that are received after December 15, 2004.)
Surviving Spouses of certain totally disabled veterans whose disability may not have been the cause of death