Are you considering purchasing multiple homes in South Carolina? As a property investor, it’s understandable that you want to get the best ROI (return on investment) possible. When investing in multiple properties, it’s a good idea to work with a commercial lender. Such lenders often offer a blanket mortgage, which has both benefits and downsides but is worth looking into if you want to simplify the process of securing numerous loans at once.
A blanket mortgage is a single loan that encompasses several real estate properties. Before signing this type of contract, it’s imperative to make sure you understand the potential pros and cons associated with the process. It’s wise to discuss your options with an experienced financial adviser, who can make recommendations and help determine whether it’s a good fit for your investment portfolio.
A blanket mortgage carries several benefits
There are several reasons why experienced real estate investors and developers often choose a blanket mortgage to simultaneously purchase multiple homes or buildings. Here are a few potential benefits:
- You can sell off individual properties without having to pay off the entire loan.
- A blanket mortgage simplifies the payment process with one loan, one interest rate and one monthly payment.
- You don’t have to pay separate closing costs per loan.
Be aware of the potential downsides for this type of real estate agreement
Not having to pay separate closing costs with multiple mortgage loans on investment properties makes a blanket mortgage an attractive option for many investors; however, keep these things in mind:
- Closing costs might be higher than they would be with a single mortgage.
- If you sell off a property, you can’t keep the proceeds; you must pay back the portion of the loan associated with that property.
- You must be prepared to place a high down payment to secure the deal, often half of the combined price of the properties.
- If you default on the loan, you could lose all the properties to foreclosure.
These are not extensive lists. They do, however, provide a basic overview of key issues to keep in mind if you’re considering applying for a blanket mortgage loan.
What must you do to qualify?
As with any mortgage loan, you must apply for a blanket mortgage with a suitable lender. Borrower requirements vary; if you decide not to go with one lender, do not assume that the next one will have the same qualification standards. Always read the fine print and never sign any contract unless you fully understand the terms of agreement. Also, if you are buying multiple homes at the same time, you’ll want to work with an experienced real estate agent to help you accomplish your goals.