Portfolio and Conventional

[Brian G.]

Do portfolio loans count toward your 10 max conventional loans per borrower? For example, if I currently had 5 portfolio loans am I limited to only 5 more loans if I go conventional now or would I still have 10 conventional loans available?

[Andrew Postell]

@Brian G. Fannie Mae and Freddie Mac count loans on properties that you are personally obligated for. So if you have portfolio loans that are lent to your LLC...then you would not be personally obligate for the loans....so they wouldn't count against your loan maximum. Also, the entity that OWNS the property is different than who is OBLIGATED for the loan. So if your LLC owns the property....but you are obligate personally for the loan, then it counts against you. I hope this makes sense how I am describing this. Feel free to ask anything additional if you need. Thanks!

[Brian G.]

@Andrew Postell I’m curious if there is an effective strategy to go after more expensive RE say in Ca and much less expensive RE say OOS simultaneously while preserving my 10 conventional mortgages for the more expensive RE market in Ca. I’m currently considering both markets but wouldn’t want to use conventional lending for really inexpensive RE. I mean why use the cheapest money and best term loans on inexpensive RE if one can help it right?

[Andrew Postell]

@Brian G. and now you are talking about a question that every investor has - what's the best money for me?  99% of the time, Fannie/Freddie money is the cheapest.  Not just because of rate but becuase it's also a 30 year fixed rate which helps you cash flow.  Some portfolio/commercial loans are 20 year adjustable loans.  So even if the rate was lower, your payment would be higher because you have to pay it back faster.  And what's your definition of "small"?  Is $50k small to you?  or is $150k small to you?  The best thing I can say is get out there and meet some lenders and get prequalified.  Knowing what you can actually qualify for will show you what is the right level for you.  Hope that helps.

[Albert Bui]

Originally posted by @Brian G.:

Do portfolio loans count toward your 10 max conventional loans per borrower? For example, if I currently had 5 portfolio loans am I limited to only 5 more loans if I go conventional now or would I still have 10 conventional loans available?

If we take out the technical language any 1-4 unit residential property that has financing, lien(s) recorded on title, counts as a "financed," property and counts against your 10.

Mobile homes dont count unless its title eliminated

Land does not count 

etc only 1-4 residential with financing on it counts as 1 against the 10 max.

Prior definition, you had to be on title and on the note as a borrower for it to count as a financed property against you however currently only the person who is obligated on the note is counted so you can be on title and not on the note, and it wouldnt count against you within this financed property context.

Hope that helps if you're looking to do some mortgage planning or have questions feel free to let me