Cycle of Mortgage financing

These days mortgage financing is one of the ideal choice people choose to go in for incase they are in need for buying their dream home, but in the olden days the scenario was entirely different. Incase they wanted a home loan they walked down to the nearest bank or any financial institution they provided money on interest. In such case incase the bank had allocated some additional funds and they considered to have a good credit risk then in such case they would lend the money from their own funds. But these days the scenario has changed completely, the major amount of the money comes in from the three major institutions which have been listed as follows:

* FNMA- Federal National Mortgage Association popularly referred as Fannie Mae

* FHLMC- Federal Home Loan Mortgage Corporation popularly known as Freddie Mac

* GNMA- Government National Mortgage association popularly known as Ginnie Mae

The process in which it works now is explained as follows:

First incase you are intending to have a home loan then it is important to understand that you need to select any lender and apply for a home loan; as far as the processing of the house is concerned it is important to understand that the institution to whom you have approached for the home loan will perform the processing tasks and verification process and after this process you will own the house but with the major fact at hand that you are also liable to repay the home loan by making regular and fixed mortgage payments. Another aspect that you need to consider is that you would be making the payments to the company for where the loan has originated but it is important to consider to the fact that you need to pay the loan payments to the institution from where you have originated the loan and inturn they would transfer the payment to the source where the loan has originated.  In this case it is important to consider the fact that the company from where you have taken up the loan is the not the actual owner of the loan amount, they are the service providers for your loan amount, they are called as the servicers as they are the institution that simply acts as a major link between the provider of the loan and the actual takers of the loan. After you have started repaying the loan with smaller installments what is happening behind the scenes is that the loan what you are paying to the servicer gets packaged into a pool and they are transported to the three original institutions which have been mentioned above. A question might have aroused as to what is the fee that the service provider get: they are usually paid a monthly fee for the processing tasks and also for the task of looking after the loan repayment issues. The fee is only 3/8ths of a percent or so, but it is to be noted that the amount adds up. This is how the entire cycle works up.