Hi guys, I've just got a couple of questions for you on portfolio loans:
1) Can you fold rehab costs into the loan?
2) How are closing costs paid, can they be rolled in?
3) Does each property get assigned an "origination fees" of any kind.
Specialist · Victor, NY · Member since 2013 · 823 posts · 844 votes
13y
Ben Savage,
By their very nature portfolio loans can differ considerably from bank to bank. Because the bank holds them on their books as in house investments, they do not need to conform to fannie/freddie guidelines and therefore the banks make the rules. In my experience, some banks will fold some rehab costs into the loan and require a down payment that is a set percentage of the "project cost". Other banks will only loan a percentage of the purchase price and require you to fund rehab.
Closing costs are usually out of pocket unless you are talking about a refinance.
Each loan will have an origination fee. If more than one property is used to secure the loan (known as a blanket mortgage) there usually is only one origination fee.
Hope that helps.
Another important point is that the terms of these loans tend to improve as your relationship with the bank grows....."more Valuable" customers get better terms.
Specialist · Victor, NY · Member since 2013 · 823 posts · 844 votes
13y
Ben Savage,
By their very nature portfolio loans can differ considerably from bank to bank. Because the bank holds them on their books as in house investments, they do not need to conform to fannie/freddie guidelines and therefore the banks make the rules. In my experience, some banks will fold some rehab costs into the loan and require a down payment that is a set percentage of the "project cost". Other banks will only loan a percentage of the purchase price and require you to fund rehab.
Closing costs are usually out of pocket unless you are talking about a refinance.
Each loan will have an origination fee. If more than one property is used to secure the loan (known as a blanket mortgage) there usually is only one origination fee.
Hope that helps.
Another important point is that the terms of these loans tend to improve as your relationship with the bank grows....."more Valuable" customers get better terms.
Investor · -, IL · Member since 2010 · 409 posts · 616 votes
13y
Michael is right that it can be different with each lender. Try small local banks. My lender allows me to roll everything into the loan (rehab, closing costs, etc). As long as I stay under 85% LTV I get the green light from them each time.
Also if I come in at say 65% LTV I can turn around and immediately refinance and pull cash out up to the 85% LTV amount and get that extra 20% cash in my pocket.
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
13y
Ben Savage, what Ryan claims is highly unusual, immediate cash out refis are not in the scope of prudent lending practice with any bank, neither is the 85% LTV.
If you are doing a blanket loan, one loan on several properties, make sure there is a release fee or amount to be paid on the loan to release each property, without that you'd have all your properties locked in unless the whole loan is paid off. :)
Apologies for hijacking the thread but I feel my question is fairly similar. I have a few houses that I rent and pulled out about 150,000 that I want to use to buy about 600,000 total in properties? What financing product is the best fit for this? In a perfect world I'd like to have a line that I can draw from as I acquire and update properties.