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Portfolio mortgages are loans that are kept on the books instead of being sold. The significance of this to borrowers is that by not being sold on the secondary market, originating lenders can draft more flexible criteria for qualification. By relaxing qualification requirements, you can get access to money that would be denied to you elsewhere.
The ease of qualification is useful to both property investors and folks with dodgy credit histories trying to buy property. With portfolio mortgages, the typical standards on your debt-to-income ratio are also relaxed.
The originating lender assumes all of the risk on portfolio mortgages and keeps them for the duration of the entire loan. Due to this, lenders offering portfolio mortgages focus on long-term relationships. With so much risk on the lender, you’ll still be held to certain requirements as a borrower, but you’ll find that the terms are much more accommodating than you’d receive at a larger bank.
In focusing on maintaining long-term relationships, you’ll benefit as a borrower because these lending institutions don’t engage in predatory lending. Larger banks who trade off hundreds of mortgages every day are known to focus on making commissions to issue predatory loans and then dump the debt.
Lenders who deal in portfolio mortgages are often smaller in scale and easier to work with. You’ll be more secure as a borrower as well.
Portfolio Mortgages for Single Family Housing Rental Properties
One of the groups who benefit from portfolio mortgages the most are rental property investors who deal in single-family homes. To finance the acquisition of single-family homes for rent is best achieved today by a portfolio mortgage.
As experienced income-property investors know, there’s plenty of opportunity in single-family housing in the right locations. Take Seattle for example. The price for single-family homes is out of reach for many aspiring homeowners, creating a vacuum of demand for affordable rental housing.
Bridging the gap between folks looking for homes and those who can’t afford to buy them is an important function of the rental market. By renting single-family homes you’re not just making a profit, you’re making a difference. Providing affordable housing helps to grow stronger communities.
As a real estate investor, it is in your interest to do your part to foster community growth. The success of the community is your success as it empowers residents to pay rent without fail.
Invest in a Variety of Property Types, with Portfolio Mortgages
With a portfolio mortgage, you can get financed for a wide variety of property types that far exceeds the selection of conventional mortgages. You can use these loans to fund the purchase of properties that are not subject to government guidelines.
These properties range from property that is commercially zoned to condos or non-traditional housing. The added flexibility afforded by portfolio mortgages makes it possible to invest in properties that banks would never issue financing.
The wise investor will spread bets across the board, snatching up commercial property, condos, and single-family homes alike and rent them all out at a profit. By diversifying your portfolio, the risk is diluted to the point where if one area fails, the others can pick up the slack.
Why You Should Work with a Direct Money Lender
You won’t find many portfolio mortgages at banks any more, especially after 2008. Where you will find them, however, is thru direct money lenders like Rental Home Financing.
These institutions are not subject to the same rules and regulations as banks who work with Freddie Mac and Fannie Mae.
When you work with a direct money lender instead of a bank or credit union it is much easier to qualify because they don’t answer to these strict regulatory stipulations.
For applicants with the same credit score, you can be denied at a bank or credit union for the same amount that you can get approved for from direct money lenders.
Choosing a Direct Money Lender for a Portfolio Mortgage
There are several important factors to keep in mind when shopping for a direct money lender that offers portfolio mortgages. First and foremost, you want to make sure that the lender is trustworthy and does not have a reputation for jacking up rates after the first few months.
Direct money lenders like Rental Home Financing are among the most trusted and reliable names in the business. Perfect for new investors as well as more seasoned professionals, Rental Home Financing knows what it takes to finance successful real-estate ventures.
When the Bank Won’t Work with You, Rental Home Financing Will
When you partner with Rental Home Financing, you won’t be held back by the same restrictions banks impose. Instead, you’ll be free to get access to the money you need, with a portfolio mortgage. It’s not just about getting the best deal, it’s about finding a partner in finance that you can trust. Rental Home Financing is dedicated to the success of its customers which is part of what has made it such a strong leader in the industry.
Talk to the experts at Rental Home Financing and ask about how a portfolio mortgage can help you qualify.