Hi just wondering how many mortgages you can have in your name and does it bring down your credit score even if they are all paid on time?
The free market determines the number of mortgages you can have. However, everytime you apply for credit, increase a credit line, make a credit card purchase etc. your credit score can be impacted.
thanks for the help but as an average your typical real estate investor with a bunch of properties. How many mortgages can be gotten and if payments are made on time does it really affect your credit score?
With enough creativity, the number is nearly unlimited…you may have to go to secondary markets…the standard number that you will hear is “10”…but that is not completely true…
Each time I’ve taken one, my score has dipped a little but has rebounded after a few months…
Is there an issue that you specifically need addressed? Yours is kind of a wide-arm sweep question.
Keith
Hi Keith thanks for the response and help. I have a credit partner that is concerned about getting too many mortgages and having his score drop. I just want to find out does the score drop? We already have 3 proerties all bought within the last 3 months and his score has dropped just a bit, I tld him it should come back up. I just want to see how many mortgages others have gotten and if it has bothered their score.
Thanks
When I started my score was in the low 800s…it’s still in the low 800s…
Keith
how many mortgages have you held at one time?
Several…
I don’t discuss the absolute specifics of my overall financial investments in the open forums.
Keith
sorry didnt mean to pry and I understand. Thanks for the help
No problem…just too many prying eyes on the open internet!
Keith
gotcha, another question? Where do investors find all of the money to get properties? How do you keep coming up with money for down payments and closing costs?
After residential loans are originated, most are sold off on the secondary market to Fannie Mae and Freddie Mac. This includes loans originated by brokers through wholesale lenders or retail branches of large banks. Fannie Mae and Freddie Mac set guidelines which the lenders must conform to if they plan on selling of their loans (thus you get “conforming loans”). Part of the guidelines restrict clients from owning more than 10 financed 1-4 unit properties. These are the loans that offer the most attractive rates. Although the guidelines allow for up to 10 properties, many lenders will cap their own exposure to 4. Using several lenders may be required to reach your first 10.
If you need high ltv financing or have gone over the “10” limit then there are portfolio/alt-a loans offered by those same lenders. AltA loans are not sold off to Fannie or Freddie on the secondary market, instead, they are sold off to other wallstreet investors who have set their own lending guidelines. These are not subprime loans which are typically reserved for credit challenged borrowers. Alt A rates are slightly higher than conforming loans but still will allow for great cash flow.
There are a handful of lenders that will allow you to own an unlimited amount of properties and have no maximum that they will do themselves.
For AltA products you’ll need a minimum of 620, higher if you need high ltv or reduced documentation.
Some of these loans can go up to 100%. Seller is usually allowed to cover 2-3% of the closing costs so that needs to be worked into the deal upfront.
Another thing to note here is that if you are a beginning investor and the 3 properties you mentioned are your first ones, you will start running into “rapid acquisition” problems. Most lenders have limits as to how many properties you can buy until you can document a 2 year history of managing rental properties. However, again, there are always exceptions to the rule and lenders who work niches and may not have this limitation.
I’ve been told to get properties in the LLC names & that will not show on personal reports
I would think this would expand the number & have less chance of neg impact on FICO scores
I think all mortgages get a personal guarantee. Is this correct or can you have it not show up on your personal credit? Can you get a car without showing up on personal credit?
I may be mistaken but the credit for our loan was evaluated from our personal credit. We took title as our LLC so that mortgage does not show under our name on the credit reports. The credit card we have for the LLC is the same… credit report was obtain via personal credit but it does not show on our report.
As I understand it, in time our LLC will develop its own credit ‘reputation’…