Buying A Property With A Portfolio Loan

Are you ready to buy a property, but concerned that you might not be able to meet the eligibility requirements of a traditional mortgage or concerned that the property you plan to purchase exceeds the conforming home loan limit? A portfolio loan is one option that could provide a borrower who may not typically be able to qualify for most traditional loans an opportunity to obtain home financing. If you are located in the areas of Palm Beach, Tri-County, or Broward County, Florida, and have questions about your mortgage options, CTC is here to help. Continue reading to learn more about buying a property with a portfolio loan.

Understanding How Portfolio Loans Work

To understand how portfolio loans work, it is best to understand how the traditional mortgage process works first. In order to lend borrowers funding for a conventional loan, a traditional mortgage lender sells the borrower’s debt to an outside party, like Fannie Mae or Freddie Mac. These mortgage types need to meet specified guidelines in order to be sold off, however, in some cases, mortgages are not aligned with the guidelines. When this situation occurs, the loan becomes a “portfolio loan”, and because the debt is not sold off, it becomes part of the lender’s portfolio. The purpose of a portfolio loan is to help a borrower who may not typically be able to qualify for a traditional home loan still qualify for financing. These types of loans are generally offered through smaller banks and credit unions instead of large, corporate banks. A portfolio loan can help a borrower who is self-employed, who may have had a previous foreclosure or bankruptcy, or a borrower with a lower credit score become a homeowner. Since portfolio loans have alternative eligibility requirements, a lender could require a borrower to verify income through bank statements rather than through tax documentation.

What Are The Advantages To Obtaining A Portfolio Loan?

Although a portfolio loan might not make sense to some borrowers, it can offer a variety of benefits to others. A major benefit is that the portfolio loan application requirements tend to be less strict than those of a conventional loan since a lender is not required to adhere to conforming loan standards and can set their own guidelines. This is beneficial for borrowers who have difficulty qualifying for a traditional home loan and help them finance a property. Another advantage of a portfolio loan is that a borrower is more likely to have a closer relationship with their loan officer since they will be working together throughout the life of the loan, which could help mitigate any potential issues that may arise with the loan. Also, portfolio loans do not require private mortgage insurance, which will save the borrower a great deal of money over time. If you have questions about getting a portfolio loan in Palm Beach, Tri-County, or Broward County, Florida, contact CTC Mortgage today for a consultation.

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