Getting Past the 4 Mortgage Rule - Business Borrowing?

Question

My wife and I have three conventionally financed properties (including our primary residence).  We are in the process of purchasing a fourth, with a fifth identified.  As I understand, conventional financing is generally limited to four mortgages, unless you work with a portfolio lender.  Here is my question:

If we use our LLC as the borrower for the fourth property and personally guarantee the loan, does it count toward our 4 mortgages?  Will big banks like B of A or Wells Fargo make conventional loans like this to business entities?

Jesse Smith · Answer

@Joshua Davies I forgot to tag you in my response comment.  See above.

Jesse Smith · Answer

We got 5.125 fixed for 30 with no points.  Most others were at 5.375.

Joshua Davies · Answer

@Jesse Smith I find that there is not much difference in them really. If you don’t mind me asking, what rates were you offered on what type of property? Rates will always be higher for investment properties but for me it isn’t anything that would kill the deal.

Jesse Smith · Answer

@Joshua Davies  That's my understanding - That the 4-mortgage limit is a tighter restriction imposed by some national lenders on the 10-mortgage limit from FNMA.

Do you find the rates with lenders, who don't impose the 4-limit, to be competitive with those who do?  In my recent round of rate shopping, B of A and Wells Fargo crushed the others on rate, and I was able to get the fees down significantly.  I just don't want to end up costing myself 50-75 basis points on a long-term primary mortgage loan, because I got into the "beyond 4 mortgage" territory.

Caleb Heimsoth · Answer

@Jesse Smith that is 10 with conventional financing.  Not all banks will do that but there are also plenty that will.  Try US bank I think they go up to 5

Jesse Smith · Answer

@Caleb Heimsoth - Thanks for your response.  I've also read about the 5-10 mortgage rule.  However, we are mainly looking at conventional financing, because the next loan would be for our new primary residence.  Seems that most national lenders draw a hard line at 4 financed properties.

We plan to live in the new residence for a long time, and it will be our largest loan to date.  I would really prefer to lock in 30-yr, fixed rate financing, instead of dealing with the 20yr am/5yr balloon loans being offered by our local lenders.

Getting Past the 4 Mortgage Rule - Business Borrowing?

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