what are the pros and cons of taking out a fannie mae loan over a standard mortgage loan?

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    Fannie Mae loans are written to very commonly accepted guidelines and offered by most mainstream lenders, which can allow for excellent financing for homeowners seeking very traditional financing, particularly the popular 30 year fixed rate mortgages which the company basically sets the benchmark for.

    Pros:

    1. Consistent pricing from most lenders, so you don't have to shop around as much.

    2. Ability to handle less than perfect credit even with a smaller down payment through the MyCommunity100 program.

    3. A great alternative to a "subprime loan" for borrowers whose median FICO credit score is below 620.

    Cons:

    1. Fannie Mae loans for single family residences in the 48 continental states are only available to a maximum of $417,000, however the limits for 2 family to 4 unit properties is higher, as are the limits for loans made in Alaska and Hawaii. Larger loans are considered "jumbo" and do not qualify for Fannie Mae programs.

    2. Borrowers with truly excellent credit may qualify for better programs than those offered by Fannie Mae.

    3. Fannie Mae loans are not available in popular interest only or interest deferred (pay option) varieties. You had better want a regular 30 year fixed mortgage with principal and interest payments.

    Summary:

    All in all, if the loan is less than $417,000 or otherwise meets the Fannie Mae "conforming" loan size limits, you would be well advised to explore the option of getting a Fannie Mae loan. However, you may wish to consider getting quotes for both conforming (Fannie Mae) and non-conforming (non-Fannie Mae) loans. Note that some lenders offer programs from Freddie Mac, the other giant standard in smaller mortgages, which are in most cases identical to Fannie Mae for most purposes.

    Good Luck!

  • Anonymous
    1 decade ago

    none. fannie mae offers great fixed rate principal and interest programs. so do the lenders. if you want interest only loans or adjustable loans (2,3,5, or 7 year), then it is better to go with traditional financing as opposed to fannie mae. Let me know if you need help figuring this out.

    Source(s): I am a sales manager/mortgage broker for a nationwide company
  • lissa
    Lv 4
    5 years ago

    Was asking myself the same thing

  • 5 years ago

    I was curious about this too

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