The Federal Home Loan Mortgage Corporation is a government sponsored enterprise that buys residential mortgages from financial institutions and repackages them to sell as investment securities. Freddie Mac was established to enhance the liquidity of residential mortgages by assisting in the development of a secondary market for conventional mortgages. It accomplishes this by purchasing mortgages from a mortgage originator and holding them as investments in its portfolio, or securitizing them. Selecting your mortgage is almost as important as selecting your home. There are many things to consider. What you decide may make a big difference in your monthly payments and in the overall cost of your loan.
The factors one must consider while selecting a home mortgage are:-
- Evaluate different mortgages and use the mortgage worksheet.
- Understand mortgage rates.
- Understand the differences between fixed- and adjustable-rate mortgages.
- Know how 15-year and 30-year mortgages change your monthly payments.
- Understand down payments and closing costs.
- Your lender will get an appraisal to determine the market value of your new home, which will be used as collateral for your loan. You'll be charged a fee for this service; it will likely be included in your closing costs.
- Your lender will look at your credit report to verify your credit history. You'll be charged a fee for this document as well. If you're pre-approved, this step may have already been completed.
- Your lender will verify your personal information like your bank account and employment information. Your lender may ask you for your 2 most recent monthly bank statements. If you can't provide them, a Verification of Employment (VOE) and Verification of Deposit (VOD) will be mailed on your behalf to verify the last 2 years of employment and banking information.
This disclosure includes a summary of the total cost of credit, such as the Annual Percentage Rate (APR) and other specifics of the loan.
"A Home Buyer's Guide to Settlement Costs."
This guide is a government publication that describes the closing or "settlement" process, associated costs, and your rights.
Adjustable-Rate Mortgage (ARM) disclosure.
This disclosure includes information about terms and costs associated with an ARM, past performance of the index to which the interest rate will be tied, and the "Consumer Handbook on Adjustable-Rate Mortgages."
Annual Percentage Rate (APR) information.
This is the cost of credit expressed as a yearly rate. The APR includes the interest rate, points, broker fee and any other charge you're required to pay in order to obtain your mortgage loan.