Portfolio loan ASAP or conventional as long as you can?

2 Replies

Hi, I've read a lot of old post but I can't make up my mind. So please, in today's economy, let me know what you think.

Here is my understanding, on a 30 years mortgage for a buy and hold (with light rehab) investor:

1. Portfolio loan has a higher interest rate (I've seen them starting at 4.5% up to 9%) compare to conventional (around 3.5%). If you switch faster to a portfolio loan and you want to grow faster, you will build a relationship faster and eventually get better rates and a better line of credit to close faster.

2. Conventional has a much better rate. Some say you should use all of them to save on your mortgage and only switch to a portfolio loan after that. If you do so, you won't build the relationship, but you will have more experience to show when it's time to switch to that kind of loan.

Thanks all for your thoughts

Hi Jonathan, I'd talk to both lenders and see what terms they can offer in this market. I'd ask to see if you'd qualify, terms, what documentation is needed, and what the close time will be. Hope this helps.

Originally posted by @Jonathan Leblond :

Hi, I've read a lot of old post but I can't make up my mind. So please, in today's economy, let me know what you think.

Here is my understanding, on a 30 years mortgage for a buy and hold (with light rehab) investor:

1. Portfolio loan has a higher interest rate (I've seen them starting at 4.5% up to 9%) compare to conventional (around 3.5%). If you switch faster to a portfolio loan and you want to grow faster, you will build a relationship faster and eventually get better rates and a better line of credit to close faster.

2. Conventional has a much better rate. Some say you should use all of them to save on your mortgage and only switch to a portfolio loan after that. If you do so, you won't build the relationship, but you will have more experience to show when it's time to switch to that kind of loan.

Thanks all for your thoughts

The money you save going with conventional loans for as long as you can, far outweighs any relationship you may be building with a portfolio lender (spoken by a portfolio lender).  Learn the buy and hold ropes with the cheap money so you can make informed decisions when the money isn't so cheap.  Bottom line, take the cheap money first.

Stephanie