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Many
borrowers who fall just short of qualifying for a traditional "A Paper"
loan can qualify for for a loan through Fannie Maes Expanded Approval
loan program. The Fannie Mae Expanded Approval program bridges the gap
between traditional subprime rates and regular Fannie Mae Financing.
Fannie
Mae is a government sponsored enterprise that only buys conforming
loans. The Fannie Mae expanded approval loan will have a lower interest
rate than a subprime loan. This can result in a lower payment and
significant savings for the borrower.
Fannie
Mae expanded approval loans will have PMI payments that are much higher
then a standard conforming loan. In fact some borrower may be able to
actually get a lower payment through an Alt-A or sub prime lender then
they can with a expanded approval of 2 or 3.
Borrowers
who have had credit problems in the past often are excellent candidates
for an Expanded Approval(EA) loan. EA loans have three different risk
levels: 1,2, and 3. The higher the level number, the higher the
associated risk and actual interest rate is with the loan.
Fannie
Mae Expanded Approval loans are a good option for folks whose loan size
exceeds that of the FHA loan limit. Fannie Mae Expanded Approvals also
can be issued with a debt ratio much higher than standard subprime or
FHA parameters.
Fannie
Mae Expanded Approval Levels generally categorize a loan as a higher
risk. Usually loans with lower amounts of reserves receive an Expanded
Approval Level.
If
you have been told you do not qualify for "A paper" financing and need
a subprime loan, call Brenda Puckett at 770-634-4315 or bpuckett@homeamericamortgage
for a free consultation. Let a mortgage professional see what kind of
loan you can qualify for with our automated underwriting systems.
Fannie
Mae Expanded Approval Loans are underwritten according to Fannie Mae
Guidelines. Fannie Mae and Freddie Mac are government-sponsored
enterprises which means that they are privately owned, but receive
support from the Federal Government.
Fannie
Mae's expanded approval programs often can qualify consumers for loans
at fixed rates that they would otherwise not qualify for. The biggest
downfall of the Expanded approval loans is that if you go over 80% LTV,
the PMI, Private Mortgage Insurance, can be extremely high, especially
on an Expanded Approval Level 3 loan. However, this PMI can be removed
once the home has at least 20% equity in it.
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