Do You Need a Blanket Mortgage Lender?
Blanket mortgages serve a specific purpose, so they aren’t an investment tool for everyone. They also have costs associated with them which means you need to choose them carefully.
Deciding whether you need a blanket mortgage lender can be overwhelming. There are ways you can determine whether blanket loans are right for you, though:
You want to purchase multiple properties: Blanket mortgages are primarily for investing in multiple properties at once. Without one, you will have to apply for multiple mortgages and complete the application process for each property which can be time-consuming.
You want to purchase a lot of land to divide: Another reason investors use blanket loans is to purchase large tracts of land that they plan to divide later. Blanket mortgages generally have clauses that allow for the early sale of an individual property.
You want to finance new home construction: A less common, but equally legitimate reason to get a blanket mortgage, is to build new homes. When you’re building a new home, there are multiple financing components that you can combine into one loan.
Ultimately, you want to find a blanket mortgage lender if you fall into one of these categories. They make it easier for you to manage multiple loans and properties.
3 Steps to Finding a Blanket Mortgage Lender
While certain commercial banks might offer blanket loans, most blanket mortgage lenders are specialized financial institutions that only work in specific industries or only offer a select set of loans. Fortunately, you can find the right lender if you follow these three simple steps.
1. Research both local and virtual lenders.
It is generally a good practice to start looking for loans with your bank, but since that’s not likely to be an option, you’ll want to search for other lending options. There are benefits to using either local or online lenders, and it’s largely your preference on how you want to build your financial relationship.
At this point, you don’t want to focus on apply for loans. You should, however, start a list of blanket mortgage lenders. It’s not the most exciting task, but a spreadsheet or chart can be helpful for the next step of the process.
This is a critical step in deciding on the right blanket mortgage lender. There are several loan terms that you need to compare — APR and interest rates, length of the loan, additional fees like documentation fees or prepayment penalties, and a calculation of the sum of all your loan payments.
You also want to list any other benefits the blanket mortgage lender might offer. This could include discounts for auto payments or certain levels of customer service and support. It’s also a good idea to have your rental income projections so you know which loan will generate the most income.
3. Compare the features and benefits of each lender.
This is why you put together that spreadsheet. You can spend a lot of time switching back and forth between tabs on your browser, but a spreadsheet will give you a glance over the features each lender offers. You might find that the cheapest option isn’t the best option.
Blanket mortgage lenders might have higher interest rates than conventional mortgage lenders, but the convenience of managing one loan versus dozens — maybe even hundreds — of loans is worth the additional cost. They also simplify your accounting process.
Tips for Working With a Blanket Mortgage Lender
Once you’ve narrowed down your options and have a refined list of blanket mortgage lenders, you’ll want to apply for credit strategically. After you’ve made your decision, though, you can work on building your relationship with your lender. This can lead to additional investment options in the future.
If you want to utilize your blanket mortgage lender in the future, use these tips for building a strong financial relationship:
Make loan payments on time: This is true for any type of credit you receive, but it’s critical to receiving the best offers down the road. Most lenders have some way for you to set up auto payments, so use this feature when available.
Refer other investors when possible: A great way to build a relationship with your financial institution is to refer other investors. Of course, you want to ensure you have a great experience first, but it can certainly increase your value as a client.
Pay loan balances down to increase equity: If you’re like most property investors, you have plans to purchase more property over time. By paying down your balances earlier rather than later, you can free up equity. This can give you the ability to receive cash-out refinancing offers or equity loans.
Your financial relationships are critical to the health of your business, especially if you want to build an extensive portfolio. Building them is a key element of success for many property investors.
How to Choose the Right Blanket Mortgage Lender
Choosing the right blanket mortgage lender is critical to ensuring your success. You want to look for the lender that offers the right combination of value and service. That means comparing interest rates as well as any other features they offer.
The right lender will work with you to submit any financial documents you need to qualify for a loan, and they will guide you through the process.
Looking for a reputable blanket mortgage lender? Rental Home Financing has the loan options you need to purchase multiple properties at one time.