Are you considering signing multiple real estate deals at the same time? A blanket loan might just be the right financing option for you.
Landlords or investors that are new in the real estate industry can immensely benefit from blanket loan programs. Here’s everything that you need to know about blanket loans, their benefits, requirements, and how real estate investors can qualify for one.
How do Blanket Loans Work?
With a blanket loan, borrowers get the liberty to mortgage multiple real estate properties in a single mortgage.
These loans are designed to offer more leeway to investors, landlords, real estate developers, and property flippers, and allow them to invest in multiple properties at the same time but with a single mortgage.
Borrowers who need to save money in repayments, need to get more feasible loan terms, and avoid high closing costs on their mortgage can sign up for these loan programs. Here’s how these loans can benefit the borrowers in the long run.
Leaving out the ‘Due on Sale’ Clause
Real estate investors can leave out the ‘due on sale’ clause with a blanket loan. The clause is usually a part of the promissory notes and states that the borrower will need to pay off the entire loan when the property is sold or refinanced.
However, blanket loan terms ensure that the ‘Due on Sale’ clause is left out, and the investors can sell either one or more properties without the need to refinance their mortgage.
Investors can pay back the amount of mortgage that the property represented and continue with their same loan terms without opting for a new mortgage plan.
Less Paperwork, More Investment
With multiple mortgages comes tedious paperwork!
Since borrowers put down a single mortgage for multiple properties, they don’t need to go through the hassle of filing multiple applications and get credit approval for every single property. A blanket loan allows them to submit their credit, income, and collateral details once, which can then go through a single underwriting analysis.
Similarly, instead of running to each lender to make monthly payments, the borrowers can send out a collective loan repayment to their lenders. Moreover, borrowers don’t have to go through piles of paperwork to sell or buy property units.
Save Money in the Long Run
Owning multiple properties comes with its own costs.
At the end of the loan duration, you may need to sell your properties or refinance your residential or commercial properties. This exposes the landlord to high closing costs.
However, you can rest assured that you won’t have to pay out multiple closing costs to the lending firm with a blanket loan. Since a blanket loan consolidates the landlord or investor’s mortgages in one place, they have the same terms and one closing cost. This one-time expense can ultimately save investors thousands of dollars in closing costs!
Make More Money in the Long Run
A standard refinance option might help you close your previous loan and move into a new loan with new, more feasible terms. However, a cash-out refinance can take your mortgage value to the next level.
With multiple properties at hand, investors can opt for a lender that provides cash-out refinance, pays off their loans, and locks them into new loan terms. However, the best part is yet to come!
In a cash-out refinance, borrowers can be paid up to 125% of their loan to value. The investor on their properties can then use this incoming cash. Moreover, investors can use the money to refurbish and flip their properties and set them for rentals and even sales.
A refurbished property is more likely to attract buyers and tenants and have a high resale value!
Better Loan Terms
Most investors don’t get the liberty to invest in multiple properties.
However, if you have two or more properties that are mortgaged by different lenders, you’ll probably have access to standard loan terms that every other borrower has access to. But if you have multiple real estate properties mortgaged with one lending firm, you might get that high-value client status!
This invaluable status can make you one of the leading clients and have the lenders treat you to customizable loan terms, lower interest rates, and better LTV ratios.
Invest in Multiple Properties Simultaneously
As a real estate investor, you wouldn’t want certain obstacles to limit your real estate growth.
Since most real investors aren’t allowed to hold too many properties in mortgages, they might not be able to maximize their profit and cash flows.
But if clients choose to opt for a blanket loan, they can work around this obstacle and have no limitation on the number of real estate properties that they can have at one given time.
This extension helps clients expand their real estate portfolio and increase their real estate venture.
How to Qualify for a Blanket Loan in the United States?
Not many private lending firms offer blanket loans to construction companies and real estate investors. However, if you’ve found the right private money lender, here’s how you can qualify for a blanket loan program.
- Have a successful house flipping, property developing, and investing history
- Have a high-value collateral
- Have a decent credit score and repayment history
- Have a comprehensive and well-though-out loan repayment plan
- Make a larger down payment
- have a low Debt-to-incomeratio
These qualifications help reduce the risks for lenders and borrowers. Moreover, they ensure that the lending company can draw up viable loan terms to facilitate the borrower.
Consider Commercial Private Equity for Blanket Loans in the United States
At Commercial Private Equity, we help our clients with our various commercial real estate financing options. Our senior partners extend commercial bridge loans, hard money loans, blanket loans, and hard money mortgages to our clients.
Our asset-backed programs allow us to help developers, investors and real estate agents invest in real estate properties and sow the seeds of future commercial success.