First property: recourse vs non-recourse loan?

3 Replies

I'm looking for a lender who can offer a conventional loan on my first investment property (a duplex) for buy-and-hold in NC. A local lender offered what I think to be a recourse loan (I will verify it tomorrow) at: 

- 30 years fixed, 20% down, 5.5% rate, no points. Or 5% rate with $2,500 in points, or 4.375% with $5,000 in points.  As I understand it, this is a non Fannie Mae loan and thus - recourse. 

Another national lender offers a Fannie Mae non-recourse loan: 

- 30 years fixed, 25% down, 5.375% rate with $374 in points, or 5% with $1,571 in points. 

I was told by the second lender that Fannie Mae loans for multifamily investment properties start from 25% down. 

Is it worth paying extra 5% in downpayment and slightly higher rates for a non-recourse loan which guarantees them not going after my assets except the property as collateral in case of a default,  - or - lower down and somewhat better rates but with a risk of them going after my W2 wages etc in case of a default?

Following...wasn’t aware non-recourse was available for non-commercial properties. 

In fact, not one but two major lenders are offering me 25% down non-recourse loans...

I called the lender that is asking for 20% down and she said it will be a NON-recourse loan. They are outside of Fannie and Freddie and thus are allowed to get less than 25% down on residential investment props. However, she said my loan will be sold to another bank after closing.  Should I be concerned about it?  Will the agreement specify that it's a non-recourse loan? If so, the new note owner can not change is to a recourse, am I right?  

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