Buying A Property With A Portfolio Loan
Are you interested in buying a home, but apprehensive to apply for a mortgage because you may not be able to adequately meet standard loan eligibility requirements, or want to obtain a loan that exceeds the traditional conforming loan limits? If these situations apply to you, you may want to consider a portfolio loan, which provides home financing to borrowers who may not typically get loan approval for a regular loan. If you want to know more about your home financing options in the areas of Palm Beach, Tri-County, and Broward County, Florida, CTC Mortgage can help. Read on to learn more about buying a property with a portfolio loan.
Portfolio Loans: Essential Information
When dealing with traditional loans, a lender sells a borrower’s debt to a third party, like Fannie Mae or Freddie Mac, instead of keeping it; this allows a lender to lend funding to other borrowers. These types of mortgages need to meet several guidelines in order to be sold off, however, in some cases, mortgages do not align to these guidelines. When this occurs, a loan is called a portfolio loan, and because the debt is not sold off, it then becomes part of the lender’s “portfolio”. The aim of a portfolio loan is to help a borrower who normally wouldn’t meet the eligibility requirements for a traditional loan qualify for home financing and are typically offered by smaller financial institutions such as credit unions and small banks instead of corporate banks. Since portfolio loans require alternative eligibility requirements, a lender might require bank statements for income verification rather than tax documentation. Portfolio loans are beneficial to borrowers with a lower credit score, who are self-employed, or who have had a prior home foreclosure or bankruptcy.
Portfolio Loan Advantages
Although portfolio loans may not make sense for all borrowers, they offer many benefits to others. One main advantage to a portfolio loan is that the application requirements are not as strict as a traditional loan since lenders are able to set their own guidelines and are not required to follow conforming loan standards, helping a borrower who may not generally qualify for a conventional loan to finance a property. Also, with a portfolio loan, a borrower is more likely to have a closer personal relationship with their loan officer because they will be working together throughout the life of the loan, which can be advantageous if any issues come up during the loan term. Additionally, portfolio loans do not require a borrower to pay private mortgage insurance, helping save a significant amount of money over time.
If you are interested in learning more about obtaining a property in Palm Beach, Tri-County, and Broward County, Florida with a portfolio loan, contact CTC Mortgage today for a consultation.
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