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Where can you find money for a mortgage if not on trees? Do lenders have a "CONSTANT" money supply? Where do Extra Funds come from?
Today, there are three major lenders. A great deal of loans are coming from one of these three lenders:* Fannie Mae (FNMA) Federal National Mortgage Association* Freddie Mac (FHLMC) Federal Home Loan Mortgage Corporation* Ginny Mae (GNMA) Government National Mortgage Association
To receive money from these institutions, lenders must "BID" for the money and follow national guidelines that are set relative to qualifying buyers and they must adhere to national standards for the real property value for the collateral for the mortgage that are started and that originate under the "BID" committments.
These guidelines bring a certain amount of continuity to the secondary market where American people have the ability to get these loans. Virtually all lenders get money from the same sources so the loan rate will be relatively the same no matter where you go to get the loan. When finalized, these loans are delivered to Fannie or Freddie by the BID process or by being purchased in to a Mortgage Backed Security. The loans are then sold to the American pubic with Ginny Mae approval at the current yield on Wall Street. When things work this way and the lender/seller then use the proceeds from the Fannie and Freddie Mae loans for new sales, the process works well and is very efficient.
Lenders don't borrow from the money market because of this and mortgage costs stay low. Consumers are able to easily access money to finance their homes making the American dream that much easier to accomplish. No, money doesn't grow on trees but sometimes its almost as easy to get the money as if it did.
