Mortgage loans can be come from a variety of sources, private individuals, banks, mortgage brokers, mortgage bankers, credit unions, etc.
Investors need to understand that in most cases these lending sources are not actually making their own capital available for a mortgage. Instead, they are acquiring or borrowing the funds from another party. Pension fund, hedge fund or insurance company can and do provide liquidity to banks, credit unions and lenders.
Portfolio lenders have the ability to lend from their own funds. This means that they are able to make loans available at any terms acceptable to them. In many cases, this means that a portfolio lender will have funds available with less restrictive qualifications than a conventional lender.
Why is this important to an investor?
In today’s market place conventional financing can be difficult for investment properties.
Below or the top 5 reasons to find a portfolio lender:
- Can lend to individuals that own more that 10 properties
- Can self insure their loans which allows them to finance 90% of purchase price
- They utilize compensative factors to over come deficiencies
- Allow deposits into their bank to help qualify
- Can cross collateralize other properties
There are a number of benefits to using a portfolio lender or bank, but be prepared to have a higher interest rate, high closing cost or both to utilize this out side the box lending source.