What are Portfolio Loans?
Conforming Conventional Loans and FHA mortgage loans have many strict guidelines that mortgage loan borrowers need to adhere to. The main reason why they are so strict and must follow guidelines is because once a mortgage loan is made, the lender packages up these mortgage loans and sells it to the secondary market. If the mortgage loan package does not conform with Fannie Mae guidelines, the lender cannot sell it and will end up keeping the mortgage loan in their portfolio.
How do Portfolio Lenders work?
A portfolio loan is a mortgage loan where a lender is not concerned about selling it on the secondary market. A portfolio loan can be sold but the majority of them are kept in the lender’s portfolio. The lender uses their own funds and keeps the mortgage loan for the duration of the loan.
Portfolio Loans are also called Non Conforming Loans
If you want to buy a residential property but you know you cannot get comps on the appraisal, the chances are you will not qualify for a FHA mortgage loan nor a conventional mortgage loan. Both FHA mortgage loans and conventional mortgage loans have specific appraisal criterias where you need three recent comps in the subject property’s nearby area. If there are no recent comps, there cannot be a mortgage approval. However, you can qualify for a portfolio loan with a portfolio lender where they will lend on other criterias even though there are no recent comps. A portfolio lender has the luxury to do that because they are keeping your mortgage loan
Unique and Special Properties: Portfolio Loans
If you are interested in purchasing a luxury home in an average location, the chances are that there will be no recent or nearby comps. If that is the case, the chances are that you will not qualify for a conforming conventional or FHA mortgage loan. On conforming conventional mortgage loans and FHA insured mortgage loans, there needs to be at least three recent nearby comparables on the appraisal. If there are not three nearby recent appraisals, the mortgage loan borrower will not qualify for a mortgage loan. On cases like these, a luxury home purchaser needs to obtain a portfolio loan from a portfolio loan mortgage lender.
Portfolio Lending Guidelines depends on each portfolio lender
Any unique or odd residential properties will have a hard time getting comparables on an appraisal. On cases where there are no appraisal comparables, the best bet a mortgage loan borrower has is to seek the guidance of a mortgage broker so the broker can match the mortgage loan borrower with a portfolio loan lender.
If you need a portfolio loan in California, Texas, Kentucky, Indiana, Michigan, Illinois or Florida, please contact me at 262-716-8151 or visit me at www.gustancho.com .
Gustan Cho NMLS ID 873293