Refinancing question about home mortgage

jlemon · Jul 7, 2003

I'll add to this that one of the largest purchasers of loans is Fannie Mae (US Govt). That's one of the reasons why lenders give so much attention to the maximum loan amount (currently 322,700), because they know that they can resell conforming loans at a later time, while non-conforming (large) loans usually have to stay in-house with a single lender.

As to interest rates, it's anyone's guess. Rates tend to follow the 10-year T-bill, not the federal discount rate. After the Fed announced the rate cut, mortgage rates increased by at least 0.5 points.

rockyridgefarm · Jul 7, 2003

One of my clients is a closing company. Every day, someone does a closing where all they rave about is the low interest rate they got over the internet. But the local banks are doing the same rates, usually for lower fees. Those fees can really kill a low rate....

dmccarty · Jul 7, 2003

CountryBoy1,

Here is a link for you.....

http://www.fool.com/homecenter/finance/07.htm?ref=60mortgage

At the bottom of the page they have a list of questions to
ask your lender...

Good Luck,
Dan McCarty

CountryBoy · Jul 7, 2003

Fannie Mae,I heard about that on the news a couple of weeks ago,(I think)thought there were some legal issues. /forums/images/graemlins/confused.gif

Bird · Jul 7, 2003

Fannie Mae or Freddie Mac?

dummy · Jul 8, 2003

Either or..... One got caught??? This article may be what he was thinking about. mortgage giants

CountryBoy · Jul 8, 2003

Mr Byrd....
Thanks I believe it was Freddie Mac...

StoneHeartFarm · Jul 8, 2003

To second snowmans answer, the reason the loans are sold is to keep capital in the bank. Assume you have a small bank with 20 million in deposits. (Maybe as few as a couple hundered loans). With that small of a sum, it wouldn't take long to lend it all out and have no more to loan. By selling the loans, the bank can invest its 20 million in higher interest rate loans or other investments, and still have money to loan.

Almost all of the loans made in the US will be sold to investors. There are still some small regional or district banks that will hold the majority of their loans, but they are few and growing fewer as the big boys keep buying each other out.

Fannie and Freddie are similar, both started as US government programs, and I believe both have since been privatized. (Unlike HUD). There are also a number of other investors, however there are only a handful that buy most of the loans.

Steve