In the olden days, when someone wanted a home loan they walked downtown to the neighborhood bank or savings & loan. If the bank had extra funds on hand and considered you a good credit risk, it would lend you the money directly from its own deposits. It doesn’t typically work that way anymore.
The secondary mortgage market
Today, most lenders sell the loans they originate to investors on the secondary mortgage market – often to Fannie Mae or Freddie Mac, government-sponsored entities that buy loans meeting standardized guidelines. This frees up the lender’s capital to make new loans, which is part of why mortgage money has historically been widely available.
Why this matters to you
Because most loans need to meet Fannie Mae or Freddie Mac guidelines to be sold, lenders generally can’t bend documentation or credit requirements much – the rules are set by the eventual buyer of the loan, not just your local loan officer.
Portfolio lenders are the exception
Some banks keep certain loans “in portfolio” rather than selling them, which allows more flexibility – often used for non-warrantable condos or unique properties that don’t fit standard guidelines.
Questions about financing your next home? Call Dockside Realty at 850.225.9785 or email christine@docksiderealtyinc.com.