A portfolio lender is a lender that loans it’s own money and keeps the loan in it’s own portfolio. These are most often local banks and credit unions. It is always a good idea to have a good relationship with a portfolio lender because they are very good at making exceptions to the rules. The biggest advantage to a portfolio lender is they do not abide by the conventional Fannie Mae and Freddie Mac guidelines.
Why is this important?
If you are an investor building a rental portfolio you will get cut off, if you haven’t been already, by conventional lenders once you have a total of four financed properties. This includes your primary home, which means you will only be able to obtain three rentals. Pine Financial group’s clientele consist of many investors with more than three rentals. This is not the only advantage; there are many others that like being able to pull cash out of an investment or put several properties as collateral under one loan. This is commonly referred to as a commercial blanket loan.
Here is what to expect with a portfolio lender:
- 1 point in origination
- 25 year amortizations
- 3-5 year balloons
- Often times the lender will want you to make a deposit with them
- Common sense underwriting
- 4-6 weeks for a closing
These loans generally take a little longer to close because once they are approved by the underwriter they must go in front of a committee. These committees only meet once a week.
We have relationships with a handful of portfolio lenders in Colorado only. Please check out our Pine Recommends referral page if you need someone to talk to.
If you have questions or want more information please call and we would be happy to help!