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Ginnie Mae's Role In Homeownership
To understand Ginnie Mae's role, it's useful to know something about how the mortgage process works. Most people don't have the many thousands of dollars it takes to buy a home. They must borrow money from a bank or other institution to finance their home and then pay the money back over a period of years. Frequently, the borrower's loan is then pooled with other loans and sold to investors. Every month, as homeowners make their mortgage payments to their lender, most of that money is passed to the investors in what is called the secondary mortgage market.
It is common for low-income and moderate-income individuals to have a harder time getting financing for a house. Likewise, it's often difficult to obtain financing for property in very rural or very urban areas.
And that's where the Federal government has stepped in with programs like the Federal Housing Administration (FHA), the Department of Veterans Affairs (VA), the Rural Housing Service (RHS) - and Ginnie Mae. These programs make mortgage credit available to more Americans, including those with low and moderate incomes. They also encourage homeownership in traditionally under-served areas of the country.
Through its mortgage-backed securities (MBS) program, Ginnie Mae guarantees investors that they will receive timely payments of principal and interest on their investments. This makes mortgages more attractive to investors, thereby increasing credit opportunities for prospective homeowners.
Even though Ginnie Mae does not work directly with homeowners, our role in homeownership is still a vital one. For that reason we have created Your Path to Homeownership. It's our goal to help you better understand the homebuying process. Along with the information we provide in Your Path to Homeownership, there are a handful of federal agencies that make it easier for future homeowners to purchase a home. Follow the links below to find information about each of these agencies:
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