Fannie Mae Sub Prime Products
- Question: What is Fannie Mae?
- Answer: Fannie Mae is a publicly traded company that operates under a congressional charter. It's mission is to increase the availability and affordability of home ownership for low, moderate, and middle income Americans. Typically Fannie Mae mortgage products are the lowest cost products available. If you are a bad credit mortgage borrower you might benefit from Fannie Mae's low rate options for borrowers with poor credit. When you apply with us we will always review your information to see if you qualify.
| Max LTV Primary Home | Purchase or Refi: 100% Cash Out Refi: 90% |
| Max LTV Second Home | Purchase or Refi: 95% Cash Out Refi: NA |
| Max LTV Investment | Purchase or Refi: 80% Cash Out Refi: NA |
Notes on Guidelines
The Fannie Mae Sub Prime program underwriting is based on a complex algorithm consisting of hundreds of variables. To quote the guidelines directly, "It is not possible to predict with absolute certainty the risk level associated with a loan due to the variable layers of statistical risk. We can provide general program eligibility information only. Final program qualification is to be provided by our automated system."
We have been working with the Fannie Mae underwriting system for many years. in fact Power Mortgage (that's us!) was one of the beta test sites for the automated system before it was rolled out nationally. Literally there are few mortgage companies that have the experience that we do. We encourage you to make application. We will evaluate your situation and determine the lowest cost option for you.
Fannie Mae Pricing Information
The entry of FNMA into this market goes a long way to eliminate the downside of being a B borrower. For a start, interest rates are surprisingly low (compared with a traditional B product) and are set directly by FNMA via our on-line FNMA connection. Rates range between .50% over A pricing and 1.50% over A pricing depending on all of the relative factors.
In addition, all of these loans in the highest rate category are eligible for FNMA's Timely Payment Rewards program. This option provides borrowers a single full percent automatic rate reduction at the end of 24 months based on timely payment histories. If you didn't make the cut after the first 24 months the clock starts again; make your payments on time (no 30 day lates) for 24 months and your rate will be reduced by 1%.
Unlike many traditional B loans these new FNMA products are all fixed rate programs. They have no balloons and no prepayment penalties either.
An important note: The benefits of this new FNMA program are not just for borrowers with impaired credit. Borrowers who may have been turned down by FNMA for other reasons may also be approved under these new parameters. If you have concerns about any aspect of your financial situation as regards mortgage approval, we strongly recommend that you contact us now. Home ownership may be closer and much more affordable than you think.