Who are the Main Mortgage Insurers?
These are the main mortgage insurers in the financing industry:
- Fannie Mae is a private, shareholder-owned corporation that purchases mortgages from lenders, ensuring that funds are available. The EEM product that Fannie Mae partners offer for existing homes allows the client to borrow up to 15 % of the home's appraised value to do improvements. There is no limit imposed on the cost of improvements in new construction. A homebuyer can finance 100% of the improvements without increasing the down payment.
- Freddie Mac is a stockholder-owned, congressionally chartered corporation that purchases mortgages from lenders and packages them into securities that are sold to investors. This service provides homeowners with lower housing costs and better access to home financing. With the Freddie Mac version of the EEM product, lenders can exceed the standard 2% debt-to-income stretch at their own discretion. It also allows a broader range of improvements than most EEM programs.
- The Federal Housing Authority (FHA) falls under the umbrella of the U.S. Department of Housing and Urban Development (HUD). The FHA insures mortgage and home improvement loans, in particular for first-time homebuyers and residents of disadvantaged neighborhoods. The FHA's energy-efficient mortgage finances improvement costs of $4,000 or 5% of the property value (up to $8,000)--whichever is greater. The FHA maximum mortgage limit for an area may be exceeded by the cost of the improvements. Up to $200 of the HERS evaluation may be included in the mortgage.
- The U.S. Department of Veterans Affairs (VA) offers energy-efficient mortgages to veterans with active duty service and qualified reservists. To finance the energy improvements, the loan amount may be increased up to $6,000 if the higher monthly mortgage payment is offset by lower utility expenses. However, a VA refinancing loan cannot exceed 90% of the home's appraised value, plus the cost of the improvements.
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