How many of you could actually afford to buy a house, without borrowing a home loan? None, I guess. In this age of economic meltdown and post recession hangover, it’s simply impossible to purchase a house without the help of a home loan. However, since home loan is the largest investment, you would ever make, you must gain as much information as possible about home loans, before investing in it. If you like to make this investment a success, you must attempt to know the home loan history first. Remember, once you get a clear idea about the different types of home loans, it would be easier for you to choose the best possible option for yourself. Read on to know a detailed study of the origin and the gradual evolution of home loans.
Initially, those, who like to buy a house used to borrow money from traditional lending institutions like bank, credit union or other private financing company. The origin of home funding could be traced back in 1938, when President Franklin Roosevelt took the initiative to launch the Federal National Mortgage Association or popularly known as “Fannie Mae,”. “Fannie Mae,” aimed to provide financial assistance to the common men, who had a limited income but could not afford to buy their own house. However, “Fannie Mae,” got some serious competition, when in 1970 Federal Home Loan Mortgage Corporation or in short ‘Freddie Mac,’ was established. Both these organizations were initially run by the government but they are privatized now.
The historical events like World War II also play a crucial role in the growth and popularity of the home loan financing concept. After World War II, a huge number of American citizens, who took part in the war, returned their homeland in the hope of a peaceful shelter, home. Since they badly needed a house of their own, in 1944 under the Serviceman’s Readjustment Act, Public Law 78-346 came into force. Under this law, veterans could borrow loans for purchasing or building a house. Later on, new amendments were introduced in the act, under which, people who took part in wars like Korea, Vietnam or Gulf wars can enjoy some extra privileges, while borrowing a home loan.
Home loan certainly comes with a lot of perks. With the help of a home loan, nowadays millions people can afford to own their house. However, with the current slump and topsy-turvy situation in the housing market, many home loan lenders have tightened their lending criteria and credit standards. Therefore if you like to apply for a home loan, you have to make a little preparation first. Although the aforementioned points are true and the interest rates and terms offered by different home loan lenders vary a lot, a prospective homeowner can secure a home loan quite easily here. Lastly, no matter what you choose traditional or VA, Fannie Mae, and Freddie Mac, make sure you remain aware of every possible home loan options, before signing the dotted line.
A guest post from Marlon