How Do You Buy Multiple Properties With One Mortgage?

One Mortgage for Multiple Properties

How Do You Buy Multiple Properties With One Mortgage? Yes, one mortgage can cover two residential properties. In some cases, two houses stand on a single piece of land with two separate addresses. If you are interested in financing a property like this, check with your local bank or credit union and ask whether they work with portfolio loans. The portfolio note is kept in the bank and not resold to another institution.

How To Buy Multiple Properties With One Mortgage?

If the two homes are in different counties, the mortgage lien for the primary home should be recorded first, with the filing fee paid in that county. Then, the recorded documentation should be filed, with another filing fee paid, in the second county. Each recording of the mortgage lien must specify the distinct street addresses, legal descriptions, and tax parcel ID numbers.

Consolidating Multiple Home Loans

In yet another scenario, one mortgage is created from two by a homeowner with multiple mortgaged properties. The idea is to consolidate debt so that only one home is left with a mortgage lien on it.

The owner can accomplish this feat by drawing on equity built up in a primary home to pay the balance due on a second property, essentially through a cash-out refinance loan. Typically, the new, combined loan is a larger loan than the primary home previously carried, with a higher interest rate, in place of two loans with their own particular rates and terms.

The Blanket Mortgage Loan:

The blanket mortgage, which bundles several mortgage loans together, is an option for investor-buyers who need to keep track of finances across their real estate holdings. Each property is under a single (“blanket”) set of loan terms. Every property still needs its own title search, appraisal, and insurance. Blanket loans can cover all the properties in a particular state that the buyer wishes to include, but no additional properties can be brought into the fold after closing.

There are a few more aspects to consider. Because it’s treated as a commercial undertaking, the blanket loan is a pricier loan product than a straight residential mortgage. The applicant will need to be sure the higher down payment, closing costs, and interest rate are offset by the ability to have just one, unified closing.

Combining a First and Second Mortgage:

A second mortgage on a home can take the form of a home equity loan (HEL), which is a one-time loan with a fixed rate, or a home equity line of credit (HELOC), which is a credit line with variable rates. If a second loan is attached to your house with comparatively high-interest charges and you want to take advantage of the current low rates, consolidating debts could be a smart financial move. It’s best done at a time when the owner does not plan to take out any other loans, as the new debt arrangement can unsettle the owner’s credit score.

  • Could investing in points boost your savings? A point is a percentage of interest on your loan principal, paid in advance to your lender to reduce your interest rate. If you keep the house long enough, the points you buy will pay for themselves through that lower interest rate — but the break-even point can take three to ten years to reach. After that, you’ll save on your monthly payments. If you think you might sell or refinance before that time, don’t buy points. Choose the higher interest rate instead.
  • What about negative points? When you refinance, you can also sell points to the lender. That increases the loan’s interest rate, while you get a lender’s credit to help cover closing costs.

All things considered, consolidation of your loans could come out to be more expensive, especially as a new loan resets to the start of a long-term payment schedule. If so, there’s a much simpler option.

Conclusion:

Creative mortgage planning is an art, but it mainly comes down to getting the numbers together and making comparisons. Consult with an accountant and an experienced mortgage broker in your area to bring valuable knowledge to bear on these decisions.

If you decide to refinance, it never hurts to get quotes from more than one lender. Check with local banks and credit unions and your current mortgage specialist. Depending on the type of loan product needed, well-known refinancing sites—such as AimLoan, Amerisave, Quicken, Rocket, or Zillow—can be good starting points to get quotes.

Why Is My Mortgage Company Charging Me For Hazard Insurance?

Leave a Reply