More and more people are getting into the rental business. After all, it is one of the easiest ways to earn money with more and more people moving around more frequently as the world becomes more interconnected. However, like other types of businesses, one should have a substantial amount of capital. This capital is often in the form of a loan, or multifamily loan, to be more specific.
There are various types of private and public loan, among them, is the Freddie Mac Multifamily Loan. While it might sound like a cartoon character, Freddie Mac is in fact, a government-backed program. So what is it?
What is Freddie Mac Multifamily Loan?
Freddie Mac is one of the two financial institutions under the Federal Housing Finance Agency, along with Fannie Mae, that backs private lenders. How does it work?
A borrower is provided with a loan by a private lending agency. To help this agency replenish its funds, Freddie Mac will buy the mortgage of the borrower from the private lending agency. This means that the agency will have one less borrower on its plate and can allocate its funds to other worthier borrowers.
Freddie Mac hasn’t always been a perfect business plan. However, over the years, through a course of changes and improvement, American lenders and borrowers have enjoyed the perks of having the government back-up the loans. But, it is important to note that there are certain standards and requirements to follow before a loan can be bought by Freddie Mac.
How does Freddie Mac affect your loans?
If you used to pay 7% for your loans before the Freddie Mac purchase, you would still pay the same amount after the institution has acquired your purchase. The only difference is, instead of paying it directly to your previous lender, you will now direct the payment to an authorized third party that service mortgages.
Has your mortgage been acquired by Freddie Mac? Worry not. You do not need any action on your part. All you need to do is be aware of the change and know what Freddie Mac is.