What is a Blanket Loan? ~ Getting under the blanket!

It’s a simple term referencing as a blanket covers everything (or everyone) under it, in the world of mortgage finance when a single loan is secured by more than 1 property, then those multiple properties, it could be said, are covered by that blanket loan.

Wrapped in a blanket all warm, cozy and snuggled in. hmmm, Here is another simple analogy. The multiple properties are wrapped in that one blanket loan.

The variety of entities that can benefit from this specific loan product is diverse. From Mom & Pop with a couple rental houses or commercial place of business and a rental or two. Investors with rental properties whether a few or great many properties (This is portfolio lending), Real estate trusts, investors, corporations, developers who subdivide land into parcels and the list goes on. The largest of these players in the real estate field lately are the ones who have scooped up thousands of single family properties at auctions and in bulk from banks and Freddie Mac / Fannie Mae caused by the most recent real estate meltdown and turned them into rentals.

So who will finance these blanket / wrap loans?

Here we have another diverse list: Your local savings and loan bank for mom & pop, to local commercial banks for their relationship clients all the way up to wall street money for the big guys (and girls).

Now it’s not just residential properties and land these will cover!

Multi-family apartment buildings to commercial properties are also prime candidates.

Benefits and drawbacks come with the territory so stay awake under that nice warm blanket for a moment longer while we touch on some of these topics. First of all, it takes some investigating and doing your homework before you go and get under one. Its always smart to consider if you getting under a blanket alone! Because once you put multiple properties under one loan with partners or loved ones, it has even more implications.

While some lending sources require that the properties be held in an entity such as an LLC or Corporation it’s not always the case. And don’t forget to ask, “recourse”? *personally liable* or non-recourse *hey man, don’t look at me if it all goes to hell!

As with any financial decision, you should get good council after you do your first round of inquiries on your own with an experienced loan person (banker &/or broker) your tax person and a real estate attorney so the end result is not a SURPRISE! Some of the simple benefits are the fact that you only have one escrow, and loan to pay for and keep track of. Grouping multiple properties can also benefit to allow to cross collateralize in purchase and refinance situations allowing a or properties with more equity overcome shortfalls of equity poor properties or even reduce / eliminate the need for a down payment on the purchase of additional property. And yes, you can combine a refinance with a purchase simultaneously. Fun stuff huh? But on the other side of the coin, once you put properties together, unless you have predesigned release clauses in the note and deed you may find one or more properties stuck together in the wrapper (pun intended) when you want one or some out!

Need a blanket loan? I’m here to help solve your real estate financing! Please visit my website @ ifundre.net or contact me directly via email- paul@ifundre.net.

When applying for a home loan, lending institutions will look into your capacity to pay for such loan. Banks and other private money lenders do not just give away their money when you need capital for a home loan. They will require so many things from you and it is important that you comply with these requirements to be able to qualify for such loan. One of the things banks and private lenders look into is your credit score.

What is Credit Score?

Credit score is a numerical expression that represents the creditworthiness of an individual. This is important to lenders because the credit score predicts the person’s capability to pay for a loan. Credit scores also reveal an individual’s potential risks.

Credit scores are calculated by various businesses. If you are applying for a home loan from a private lender, the company will gather all information related to your credit history or credit report. Details in your credit report are gathered and compiled by credit bureaus (Equifax, Experian, and TransUnion) which are then used by lenders to calculate your creditworthiness (usually under the FICO method).

How to Improve your Credit Score?

As mentioned, banks and private money lenders look into your credit reputation before you can apply for a home loan. These institutions want to know that you are good in settling obligations. It is important to them that you have the capabilities to pay such loan without delay. To know more about improving your credit score, here is how lenders calculate your creditworthiness.

• Payment History (35%) – This shows lenders how prompt you are at settling debt obligations. If you pay on time, you’ll get a good score. If you have been paying late and at one point you declared bankruptcy, you’ll get a bad rating.
• Outstanding Debt (30%) – This category looks into your outstanding debts. If you own several credit cards, the lender will look into your credit history to know about any debts unsettled.
• Credit Age (15%) – Lenders also consider the age of your credit file. The older the credit report, the more stable it is.
• Account Diversity (10%) – In this category, lenders look into the types of credit you have.
• Credit Inquiries (10%) – Each time a lender inquires about your credit, the inquiry will be included in the individual’s credit file. There are two types of inquiry, soft and hard inquiry. These inquiries especially the hard inquiries affect credit score.

Based on that information, it is really easy to boost your credit score. Here are 7 tips that will give you a good credit rating.

1. Pay Your Loan on Time – This is the most important thing to do to boost credit score. If you currently have obligations from lenders, it is important that you settle your obligations as scheduled. Your payment history will be forwarded in your credit file therefore, it is critical that you have paid lenders on time so your future lender will trust you when you apply for a home loan in the future.
2. Avoid Maxing Credit Card Debt – When you use credit card to pay for your bills and other things, it is important that you do not max your credit card. A maxed out credit card shows poor handling of credit. Lenders see this as a red flag. As such try to lower your obligations by settling your balances.
3. Keep Old Credit Accounts – Creditors look at the debt-to-credit limit ratio and the average age of your accounts.
4. Do Not Allow Anyone to Make an Inquiry Unless it is Important – Remember each inquiry goes to your credit file. More inquiries from lenders especially hard inquiries create a negative impression. If inquiries can’t be avoided, make sure that the inquiries are performed within a week so these will be perceived as one inquiry.
5. Pay Past Due Bills, Judgments, and Collections – Pay your outstanding obligations.
6. Check Errors in Your Credit Report – One of the things that create low credit score is error in the report. Review your report well. If there are errors, see to it that the errors are corrected.
7. Don’t Open New Lines of Credit – If you are applying for a home loan, do not open a new line of credit because this will have a negative impact.