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Freddie vs Fannie – Which Way to Go?

July 9, 2015

fannie-freddie

There are many home loan programs available these days.  Every mortgage has a different scenario.  Here are some niches available for conventional financing:

FREDDIE / LP Loans
If the gift is less than 20% of the sales price, borrower must contribute own funds equal to at least 5% of the purchase price
Allows blended ratios on non-occupant co-borrowers
Appraisal over 120 days old – Exterior only 2055 allowed to extend beyond 120 days – max date is 240 days
No PIW – Freddie offers an “HVE” on Open Access HARP only
Condo Streamline review to 90%
Max 4 financed properties when subject is a 2nd home or investment prop
Accept responses w/ disputed accounts don’t require confirmation of the accuracy of the disputed tradelines – already included in LP assessment
Cash out Freddie only requires 6 months before the new Note date
Requires 2 years landlord experience to use rental income
Funds received from a wedding allowed as borrower’s own funds
May require rent loss insurance when using rental income to qualify
Up to 50% DTI in most cases
Employment Contracts; start work within 90 days
Gift letters must list the property address being purchased
95% LTV Max on ARMs
Refinance of a restructured mortgage is not eligible
75% LTV on cash out O/O on Super Conforming up to $625k

FANNIE / DU Loans
Minimum borrower contribution from the borrower’s own funds is not required – all funds needed to complete the transaction can come from a gift (1 unit)
Occupying borrower(s) must qualify for mortgage payment (will not blend ratios)
Appraisal over 120 days old – 1004D allowed to extend the validity period – max date is 240 days
Property Inspection Waiver (PIW) may be offered in DU Findings
Condo Limited Review to 80%
If tradeline disputed and delinquency in last 2 years from credit report date, follow instructions on findings
Cash out requires 6 months seasoning before application date
No landlord experience required to use rental income
Funds received from a wedding are still considered a “gift”
Typically does not require rent loss insurance when using rental income (unless DU requires, which is rare)
Up to 45 % DTI unless major compensating factors; good reserves
Employment Contracts; start work prior to close w/VOE from new employer
Gift letters do not have to list the property address
90% LTV Max on ARMs
Restructured loans can be refinanced (restrictions apply)
Max cash out on Fannie High Balance is 60% LTV

Get Pre-Approved Today!  Apply Online for Fast Pre-Approvals www.pmccanhelp.com.

PMC offers free credit enhancement prior to submitting your loan to the bank to ensure you get the best rate possible.  Even 20 points could be .25% better in rate, which equals thousands of dollars on the life of a mortgage loan.  If you have a loan scenario email us at info@pmccanhelp.comPMC Can Help!

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