Posted on: 24th Nov, 2008 10:15 am
We own various rental properties and have a good income, but we are hearing that you cannot have more than 5 mortgages now, we currently have 10 and we just built a new home and now we are hearing this. Is is true?
Hello grinch,
Usually once you have acquired 4-5 current mortgages in your personal name lenders will not approve any additional current mortgages.
We help and counsel many property investors in this very issue here in Texas. We suggest you finance your properties into an entity(LLC, etc.). You will need to establish a banking relationship and hopefully have great credit to get great rates for financing these properties into the entity. Having too many mortgages within your personal credit report can be harmful to your personal credit score as well. You need to have your properties not showing on your personal credit report.
Let us know if you still have questions. You may visit home-buddies.com and sign up for a free session.
Good Luck. :D
Usually once you have acquired 4-5 current mortgages in your personal name lenders will not approve any additional current mortgages.
We help and counsel many property investors in this very issue here in Texas. We suggest you finance your properties into an entity(LLC, etc.). You will need to establish a banking relationship and hopefully have great credit to get great rates for financing these properties into the entity. Having too many mortgages within your personal credit report can be harmful to your personal credit score as well. You need to have your properties not showing on your personal credit report.
Let us know if you still have questions. You may visit home-buddies.com and sign up for a free session.
Good Luck. :D
Hi grinch!
Welcome to forums!
I think you should follow Cliff's advice. If you convert your properties into an entity i.e LLC or others, you will also get certain taxation benefits and also the owners of the LLC are protected from certain liability for acts and debts of the LLC.
Feel free to ask if you have further queries.
Sussane
Welcome to forums!
I think you should follow Cliff's advice. If you convert your properties into an entity i.e LLC or others, you will also get certain taxation benefits and also the owners of the LLC are protected from certain liability for acts and debts of the LLC.
Feel free to ask if you have further queries.
Sussane
Fannie and Freddie reduced their cap from 10 properties total to 4. Cliff is right, put all your long-term rentals into an LLC. You can then take that parcel of properties to a broker or commercial lender, and inquire about a blanket loan, which will clear up your personal credit, and give you much more flexibility over your investment properties' equity. Expect these type of loans to be just a little higher in interest rate, as they're considered commercial loans. Email me if you have any questions.
I have 4 mortgages. I was unaware of this cap. I have a 100k and I am trying to buy another home for 300k how do I do this when big brother government is saying I can't have any more loans? My net worth exceeds my current debt more than 4 times.
In this case, I don't think you can do much. Lenders won't increase the cap for you.
Hi SunnyD
I agree with Ana here. Moreover, if you go against the rule and take mortgage on another property, you can be penalized for it.
Thanks.
I agree with Ana here. Moreover, if you go against the rule and take mortgage on another property, you can be penalized for it.
Thanks.
"big brother government"?? no, it's not the government - it is investors who purchase mortgages, and there's some rationality to it.
when a person owns multiple properties, the risk factor increases in every new loan granted. investment properties have always been considered riskier than owner-occupied (i know that thought has taken a hit lately), and the new requirements we've seen are really corrections to the market. the risk that's become inherent in many owner-occupied situations lately will turn around again.
lenders and their investors are trying to manage their risk as best they can, with the limited trunk of knowledge and good sense that is at their disposal. but it's definitely not big brother. he's the one who curtailed all your personal rights; that's all.
when a person owns multiple properties, the risk factor increases in every new loan granted. investment properties have always been considered riskier than owner-occupied (i know that thought has taken a hit lately), and the new requirements we've seen are really corrections to the market. the risk that's become inherent in many owner-occupied situations lately will turn around again.
lenders and their investors are trying to manage their risk as best they can, with the limited trunk of knowledge and good sense that is at their disposal. but it's definitely not big brother. he's the one who curtailed all your personal rights; that's all.
I understand how to deed them to the LLC, but I thought that most banks won't allow you to move your note over to the LLC. is this not really the case? I have 7 rentals and 1 owner occ, and we want to move, but most lenders are telling me I cannot get another loan if we move.
You could move the deed over to an LLC but not the mortgage. There ARE lenders who will allow you to have up to 10 mortgages.
To: George M. Akerley
With all do respect you are wrong. That may be how YOU measure it, however each proeprty is its own flow of cash (be it positive or negative). There is no reason why one person owning 2 properties is any more risky than two people each owning one of the aforementioned proerpties. It is big brother. Lastly, it is not investors,...its freddie mac. Theres a difference. Most of the mortgages that have been defaulted on are NOT by people owning 4 or more mortgages but in fact has been by people owning one or two homes for personal use for which they cant afford.
With all do respect you are wrong. That may be how YOU measure it, however each proeprty is its own flow of cash (be it positive or negative). There is no reason why one person owning 2 properties is any more risky than two people each owning one of the aforementioned proerpties. It is big brother. Lastly, it is not investors,...its freddie mac. Theres a difference. Most of the mortgages that have been defaulted on are NOT by people owning 4 or more mortgages but in fact has been by people owning one or two homes for personal use for which they cant afford.
i won't dispute that the majority of defaults have been on owner-occupied homes; but of course, the vast majority of the housing stock in this country is owner-occupied. hence, it makes sense that these would predominate in defaults as well.
but i don't want to get into a contest about who's right and wrong - your points were well made, jk, and though i probably won't change all of my views, i can certainly agree with some of yours. thanks for the critique - my ego is small enough that it wasn't bruised.
but i don't want to get into a contest about who's right and wrong - your points were well made, jk, and though i probably won't change all of my views, i can certainly agree with some of yours. thanks for the critique - my ego is small enough that it wasn't bruised.
I have 4 residential mortgages on homes I rent out. I live in one and want to get a mortgage on a single family house. Can I get another mortgage on the house I want to move into if one of my mortgages is a private mortgage? (3 with institutions and 1 private) or is there no difference and four mortgages of any type is the limit.
Hi ss,
Generally, you can buy as many properties as your income would allow you. However, an individual lender would not allow you to have more than 4 mortgages simultaneously. But if you are dealing with many lenders, there is no such limit as to how many mortgages you can have. Nevertheless, it will not be easy for you to get mortgage for your fifth property if you want to go for conventional loans. As per Fannie Mae guidelines, you can finance up to 10 properties in total. But when you finance more than 4 properties, you must meet certain criteria like,
1.Your credit has to be somewhere around 720.
2.There should not be any delinquencies in the past 1 year
3.You should have 25% down payment for 1 unit and 30% for 2-4 unit properties, etc.
With private and hard money lenders, there are no such criteria and limit to number of properties you can finance. However, the interest rate and on such loans would be quite high.
Generally, you can buy as many properties as your income would allow you. However, an individual lender would not allow you to have more than 4 mortgages simultaneously. But if you are dealing with many lenders, there is no such limit as to how many mortgages you can have. Nevertheless, it will not be easy for you to get mortgage for your fifth property if you want to go for conventional loans. As per Fannie Mae guidelines, you can finance up to 10 properties in total. But when you finance more than 4 properties, you must meet certain criteria like,
1.Your credit has to be somewhere around 720.
2.There should not be any delinquencies in the past 1 year
3.You should have 25% down payment for 1 unit and 30% for 2-4 unit properties, etc.
With private and hard money lenders, there are no such criteria and limit to number of properties you can finance. However, the interest rate and on such loans would be quite high.
It has been said by jlenkin7 that " per Fannie Mae guidelines, you can finance up to 10 properties in total. But when you finance more than 4 properties, you must meet certain criteria .."
Please tell me the names of such banks
Please tell me the names of such banks
Marc, most banks/lenders abide by Fannie Mae guidelines. You'll find that all of the biggest players in the market are secondary-market based (i.e. conventional) and that you'll be limited in that fashion. Even the credit unions and little banks are playing by the same rules for the most part. Those who aren't big enough to support their own lending force often use outside vendors that will assure that the products offered are Fannie- and Freddie- friendly.