4 Important Things to Understand About a Blanket Mortgage

In simplest terms, a blanket mortgage is simply a loan provided to cover financing for multiple properties. It can also be used for refinancing purposes, by consolidating their respective loans.

Still, there’s a lot more to know about these unique loans. Specifically, here are four other facts to consider before you go forward with another lending option. 

1. Blanket Mortgages are for Advanced Real Estate Investors

If you’re simply looking to purchase your first investment property, you shouldn’t lack for lending options from which to choose. The vast majority of you should be able to simply head to your bank and see what kinds of terms they’ll offer.

However, advanced real estate investors will almost always run into problems once their portfolios reach a certain size. No matter how impressive their lending history is, most banks will shy away from offering advanced investors another loan because of their large portfolios of properties.

Alternative lenders don’t have to follow the same rigid set of rules. Instead, they have the freedom to consider each borrower on a case-by-case basis, making it much easier to obtain funding from them.

2. Laws Regarding Blanket Loans Differ by State

When most investors decide to purchase more than one property at once, they tend to all be in the same vicinity.

Of course, this isn’t always the situation. For example, maybe you’ve recently begun specializing in a specific type of real estate. You might be ready to improve your portfolio by adding two such homes from one state and another that’s right across the border.

In that scenario, you can still use a blanket mortgage to cover your first two new additions. However, the laws that govern these loans differ by state, so the third residence won’t qualify. You’ll need to find another lending option to secure funding for it.

3. A Wide Variety of Terms Are Available

No two real estate investors are the same. This applies both in terms of their finances and their financial goals. It’s also one more reason that many investors prefer to find alternatives to traditional lenders. These institutions specialize in cookie-cutter loan origination. If the type of loan you want doesn’t fall within these strict guidelines, they won’t hesitate to tell you, “good luck.”

By their very nature, blanket loans are extremely customizable. A lender can’t offer one standard option because one investor may want to use the loan to purchase 3 properties while another may want to use it to refinance 12 mortgages.

While this doesn’t mean you can dictate the exact terms you want, you will most likely be pleasantly surprised by how much flexibility is available when you apply for a blanket mortgage. Again, as you’re qualified on a case-by-case basis, the better the history, the easier it will be to secure favorable terms.

4. A blanket mortgage Can Be Harder to Obtain

As we mentioned earlier, a blanket mortgage tends to be the go-to source of funds for advanced investors because traditional lenders are so reluctant to provide them with the kind of loans required by a growing portfolio.

This also means that blanket loans tend to be a lot harder to find. So, if you’ve begun to think this is your best option, now’s the time to start looking for possible lenders before another investor finds your ideal real estate.

You Can Apply for a Blanket Mortgage Right Now

With that said, it’s actually never been easier to apply for a blanket mortgage.

At Rental Home Financing, we specialize in serving experienced investors who need blanket loans. In fact, you can apply for a blanket loan right now.

So, if you’re looking to close on two or more real estate investments in the near future, don’t let that opportunity escape because traditional lenders won’t give you a loan. We are ready to help!