The Definition of Blanket Loans

Imagine looking at three adjoining homes in a vacation resort area. One home could prove to be a nice residence to retire. The other two piece of property could prove to be excellent investments for the resale market. Since the person purchasing these properties does not have the liquidity to purchase all three homes, the need for financing is a must. However, traditional mortgages often do not cover three combined home purchases. Yes, it is possible to acquire three individual mortgages but this often proves problematic. (Do you really want to make three separate mortgage payments in the same month?) Does this now mean the entrepreneurial borrower will be unable to procure financing? Actually, there are options available and they come in the form of blanket loans.

By definition, blanket loans are loans that cover a wide array of purchases. (The nickname “blanket loans” derives from the loans covering many purchases in the same way blankets are use to cover objects) The purpose of acquiring blanket loans is to eliminate procuring a series of individual loans. Instead, the blanket loan facilitates the purchase of a number of properties within a single loan.

What is the benefit of this? Actually, there are a number of benefits. One of the main benefits is the expediency provided towards acquiring the properties. This is no minor point. In some instances, it may be critical to acquire the loan and close the deal as quickly as possible. Completing three separate mortgage applications could prove time consuming. Additionally, there are a host of other problems with such a convoluted process.

Blanket loans are offered by portfolio lenders and offer a loophole to the current rules of mortgage lending as proclaimed by Fannie Mae and Freddie mac, the gianst of conventioal loans. Blanket loans are underwritten using common sense rules such as the income the property produces as opposed to the income that the investor reports at tax time.

Blanket loans don't follow the rules of conventional lending. As a result, these types of loans open the door for acquiring or refinancing property in bulk. This, in turn, opens a number of doors for entrepreneurial real estate investors.

As such, blanket loans are more than a means of acquiring lending capital. Granted, that is what a loan is, but these loans have other value as well. Blanket loans are also a pathway to producing great wealth. Because of this, their value to the real estate market and the economy in general is enormous.

Once again, time is money. Why waste time when you do not need to? Portfolio lenders can provide comprehensive blanket loans and make things much easier. So, when looking to purchase more than one property, seek a blanket loan. It is a much better plan.

by Susan Lassiter-Lyons - November 15, 2008

Back to Top

###

Source: http://www.portfolioloanblueprint.com