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how many mortgages can you have in your personal name?

We own various rental properties and have a good income, but we are hearing that you cannot have more than 5 mortgages now, we currently have 10 and we just built a new home and now we are hearing this. Is is true?

cliff3's picture
cliff3 | Joined: May 5, 2008 02:15 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hello grinch,

Usually once you have acquired 4-5 current mortgages in your personal name lenders will not approve any additional [b:e293edcde5]current[/b:e293edcde5] mortgages.

We help and counsel many property investors in this very issue here in Texas. We suggest you finance your properties into an entity(LLC, etc.). You will need to establish a banking relationship and hopefully have great credit to get great rates for financing these properties into the entity. Having too many mortgages within your personal credit report can be harmful to your personal credit score as well. You need to have your properties not showing on your personal credit report.

Let us know if you still have questions. You may visit home-buddies.com and sign up for a free session.

Good Luck. :D

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smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi grinch!

Welcome to forums!

I think you should follow Cliff's advice. If you convert your properties into an entity i.e LLC or others, you will also get certain taxation benefits and also the owners of the LLC are protected from certain liability for acts and debts of the LLC.

Feel free to ask if you have further queries.

Sussane

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ctrotta's picture
ctrotta | Joined: November 20, 2008 12:13 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Fannie and Freddie reduced their cap from 10 properties total to 4. Cliff is right, put all your long-term rentals into an LLC. You can then take that parcel of properties to a broker or commercial lender, and inquire about a blanket loan, which will clear up your personal credit, and give you much more flexibility over your investment properties' equity. Expect these type of loans to be just a little higher in interest rate, as they're considered commercial loans. Email me if you have any questions.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I have 4 mortgages. I was unaware of this cap. I have a 100k and I am trying to buy another home for 300k how do I do this when big brother government is saying I can't have any more loans? My net worth exceeds my current debt more than 4 times.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

In this case, I don't think you can do much. Lenders won't increase the cap for you.

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Niicss's picture
Niicss | Joined: October 3, 2005 11:54 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi SunnyD

I agree with Ana here. Moreover, if you go against the rule and take mortgage on another property, you can be penalized for it.

Thanks.

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gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

"big brother government"?? no, it's not the government - it is investors who purchase mortgages, and there's some rationality to it.

when a person owns multiple properties, the risk factor increases in every new loan granted. investment properties have always been considered riskier than owner-occupied (i know that thought has taken a hit lately), and the new requirements we've seen are really corrections to the market. the risk that's become inherent in many owner-occupied situations lately will turn around again.
lenders and their investors are trying to manage their risk as best they can, with the limited trunk of knowledge and good sense that is at their disposal. but it's definitely not big brother. he's the one who curtailed all your personal rights; that's all.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I understand how to deed them to the LLC, but I thought that most banks won't allow you to move your note over to the LLC. is this not really the case? I have 7 rentals and 1 owner occ, and we want to move, but most lenders are telling me I cannot get another loan if we move.

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eric1's picture
eric1 | Joined: January 4, 2009 03:52 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

You could move the deed over to an LLC but not the mortgage. There ARE lenders who will allow you to have up to 10 mortgages.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

To: George M. Akerley
With all do respect you are wrong. That may be how YOU measure it, however each proeprty is its own flow of cash (be it positive or negative). There is no reason why one person owning 2 properties is any more risky than two people each owning one of the aforementioned proerpties. It is big brother. Lastly, it is not investors,...its freddie mac. Theres a difference. Most of the mortgages that have been defaulted on are NOT by people owning 4 or more mortgages but in fact has been by people owning one or two homes for personal use for which they cant afford.

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gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

i won't dispute that the majority of defaults have been on owner-occupied homes; but of course, the vast majority of the housing stock in this country is owner-occupied. hence, it makes sense that these would predominate in defaults as well.

but i don't want to get into a contest about who's right and wrong - your points were well made, jk, and though i probably won't change all of my views, i can certainly agree with some of yours. thanks for the critique - my ego is small enough that it wasn't bruised.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I have 4 residential mortgages on homes I rent out. I live in one and want to get a mortgage on a single family house. Can I get another mortgage on the house I want to move into if one of my mortgages is a private mortgage? (3 with institutions and 1 private) or is there no difference and four mortgages of any type is the limit.

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jenkin7's picture
jenkin7 | Joined: June 4, 2007 11:02 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi ss,

Generally, you can buy as many properties as your income would allow you. However, an individual lender would not allow you to have more than 4 mortgages simultaneously. But if you are dealing with many lenders, there is no such limit as to how many mortgages you can have. Nevertheless, it will not be easy for you to get mortgage for your fifth property if you want to go for conventional loans. As per Fannie Mae guidelines, you can finance up to 10 properties in total. But when you finance more than 4 properties, you must meet certain criteria like,

1.Your credit has to be somewhere around 720.
2.There should not be any delinquencies in the past 1 year
3.You should have 25% down payment for 1 unit and 30% for 2-4 unit properties, etc.

With private and hard money lenders, there are no such criteria and limit to number of properties you can finance. However, the interest rate and on such loans would be quite high.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

It has been said by jlenkin7 that " per Fannie Mae guidelines, you can finance up to 10 properties in total. But when you finance more than 4 properties, you must meet certain criteria .."
Please tell me the names of such banks

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gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Marc, most banks/lenders abide by Fannie Mae guidelines. You'll find that all of the biggest players in the market are secondary-market based (i.e. conventional) and that you'll be limited in that fashion. Even the credit unions and little banks are playing by the same rules for the most part. Those who aren't big enough to support their own lending force often use outside vendors that will assure that the products offered are Fannie- and Freddie- friendly.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

How do I change rental properties that are still mortgaged to our LLC

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Where is the best place to [url=http://www.mortgagefit.com/refinance.html]refinance[/url] a mortgage?
Unfortunately a big bank is now in control of 5 of our mortgages. We find them unfair and heartless. What can we do? We want a reliable, smaller institution. What about a credit union?

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adonis's picture
adonis | Joined: October 22, 2005 05:04 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Welcome Phoebe,

You can use a [url=http://www.mortgagefit.com/quitclaim-deed.html]quit claim deed[/url] in order to transfer your rental properties to someone else. The new owners can contact any local lender in order to get a mortgage refinance. The banks which presently control your mortgage can also help them in getting a refinance. If the new owner wants to use a credit union, then he or she will have to be the member of that credit union.

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gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

But Adonis, we're not talking here about a new owner - Phoebe simply wants to transfer title to "our LLC" (hers) for protection. She will still be the borrower. However, whoever the lender is currently won't be happy to learn of such a transfer, as it constitutes a transfer of the property, not simply a change in name. Also, the vast majority of lenders aren't interested in lending to an LLC, though some will allow it as long as the principals are also signing documentation personally.

Credit unions have typically been more open to suggestion when it comes to multiple properties, and other types of ownership; but I believe that has changed substantially in the last few years. You'll find most CUs now participate in the secondary market, even if merely through a service. Fewer and farther between are the credit unions whose mortgage practices are individualized.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

George could you please answer this.... we own 5 properties. One outright and 4 with mortgages. We are considering purchasing a 6th property. 3 of our properties are rented, one primary residence and 1 vacation home. The 6th property would be seasonal rental and some owner use. what is the best way to proceed? Should we move everything into an LLC (separate or one LLC)? Should we try for a blanket mortgage? Should we try to get a private loan? Our current mortgages are all under 5.5% so a blanket loan may raise those rates... is it worth it? Credit scores around 800.

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gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Well, my first inclination is to tell you that blanket mortgages are pretty much extinct, I believe. That may not be a true statement everywhere in the country, but the issues involved in tieing in one loan with a variety of properties would be heinous - for lenders and borrowers both, I believe.

So I'd forget that as an alternative if I'm you. Inasmuch as you are unlikely to find a typical lender who'll consider taking on your sixth property, a private lender may well be your best bet. Unfortunately, there you'll find that such a lender is likely to look for a higher return on investment than institutional lenders who kowtow to the secondary markets.

Frankly, I'm not conversant with LLC establishment and the protection that you might afford yourselves with that. The challenge, nevertheless, is obtaining a mortgage to begin with. I don't know that LLC ownership is better or worse in this scenario - again, with a private lender you stand a better chance of actually obtaining funds, I think.

For the purpose of full disclosure, I have to tell you that I've never been involved in the private sector as far as lending is concerned, having been "institutionalized" all my working days. I may have to take those quotes off one day, too.

Contact your CPA, your attorney, realtor(s), others you may know who are in similar waters, and you'll probably be given a list of likely (potential) financing agents for your quest. I'm afraid that's my best take on things at this time.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

We have a credit score of over 720, own eight properties, of which 4 are owned free and clear and 4 have mortgages. Assets at 4 times the outstanding mortgage balances and we CAN NOT get another mortgage anywhere. We have been told four is the limit.....period.

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smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi jec!

Welcome to forums!

It is true that there is a limit on the number of properties on which you will be able to take a mortgage. Though you have a credit score of 720, as you already have a mortgage on 4 properties, you won't be able to take out a new mortgage.

Feel free to ask if you've further queries.

Sussane

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aramlopez2010's picture
aramlopez2010 | Joined: December 7, 2010 02:30 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Yaa, its better to limit it for 4, if we try do to take more it will lead to follow rules and regulations.

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gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Aram, can you elaborate on that comment? "It will lead to follow rules and regulations" would seem to be the perfect solution to mortgage fraud, mortgage crises, mortgage confusion, and a whole host of other mortgage-related topics.

Don't you think??????

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I had 1 personal mortgage, 4 investment mortgages, and 1 property owned outright and was told over and over again I couldn't refi because of the limit.

Then I found a local bank group (FirstBank of Colorado) that finances their own mortgages and had no problem w/ the refi (I did 2 last year w/ them). Their underwriting is strict: 15 yr max, high credit score (not sure how high, but need upper 700s) and at least 25% down. But I got a good rate.

Good luck; it was a needle in a haystack search.

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jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Guest,

It is good to note that you found such a bank. However, most banks follow the Freddie Mac-Fannie Mae rule of 4 properties and mortgages.

Thanks

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gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

JKS - just as you found a lender willing to work with you, there are lenders throughout the country who'll consider the same. They're not easy to find, of course, but I will continue to opine that credit unions and smaller, localized banks are the financial institutions most prone to offering services such as you encountered.

They aren't many, but when you find one, you'll know and usually be pleased.

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