The goal of government-backed and sponsored loans is to make it easier for U.S. consumers to achieve home ownership. In Utah, some of the most popular options under these financing programs include the Federal Housing Administration (FHA) loans, Freddie Mac loans, and Fannie Mae loans.
Knowing the differences, benefits, and advantages of these programs will help you make the right decision when applying for a loan. It’s vital that you have a basic understanding of each of them, as your choice will affect both the current and future standing of your finances.
FHA Loan 101
In the case of an FHA loan, the Federal Housing Administration — a Department of Housing and Urban Development agency — insures the loan. For this reason, lenders can afford to offer their products at a lower cost, without them worrying about defaults.
The assurance that the FHA gives lenders also extends home ownership opportunities to consumers with credit score falling below 600. Some FHA loans also come with special features, such as the FHA 203k loan program. With this, you can borrow money not only for purchasing a home, but also for improving it before you move in.
Fannie Mae and Freddie Mac
Freddie Mac and Fannie Mae have also become popular among Utah home buyers wishing to secure a mortgage with less rigorous standards and more affordable rates. Developed by the U. S. Congress, these systems have made a considerable contribution to the mortgage market, allowing it to become more stable and liquid.
Thanks to these, mortgage lenders have access to an extensive funding network. For this reason, they can afford to ease up on their lending requirements.
Overall, FHA, Freddie Mac, and Fannie Mae loans can serve as viable options when you want to finally give yourself the title of being a homeowner.