As you consider your options for financing the purchase of a home or property, you are likely becoming more aware than ever of how important careful mortgage planning is. For many home buyers, they will secure a mortgage and make payments, and life will go on.
However, for certain categories of buyers, handling the mortgage part of the process can become trickier—especially when you need to finance multiple properties at once. If you are concerned about the potential risks and oversights of managing multiple mortgages, a blanket mortgage (sometimes called a blanket loan) may be right for you.
What Is A Blanket Mortgage In General?
A blanket mortgage is a type of home or property loan that allows the buyer to cover multiple properties under a single loan. It enables an individual to combine several mortgage loans into a single agreement—and in some cases, this right continues on past the blanket mortgage’s origination.
For those planning on expanding their portfolio or adding more properties to their real estate plans in the future, a blanket mortgage helps to consolidate all of the finances into a single location. This prevents oversights and the hassle of managing multiple mortgage payments each month, all of which may have different due dates, payment methods, servicers and more.
A blanket mortgage not only serves buyers in convenience but also in consistency, with the same terms and rates applying to all properties covered under the loan. An additional benefit of a blanket mortgage is that it contains a release clause, which means that each property accounts for a certain portion of the loan. When you sell a property, you are released from liability for that portion of the loan; you will not need to refinance or modify the loan in any way each time you sell a property.
Is A Blanket Mortgage Right For You?
A large majority of people will not have any need for a blanket mortgage, since most homeowners will purchase only a single home to use as their primary residence and thus rely on a single mortgage. However, certain classes of buyers can benefit from a blanket mortgage; most commonly, real estate investors will take advantage of this financial vehicle to consolidate their finances across multiple investment properties.
The same can be said of house flippers, who may be managing multiple homes at once. Builders, developers and those expanding their business may also make great candidates for a blanket mortgage, effecting greater freedom and financial consistency during the process of constructing and managing multiple properties. In addition, developers who build large sections or even neighborhoods of properties can take advantage of a blanket mortgage to keep their finances consolidated in one place while they sell the properties individually.
Because of the blanket mortgage’s release clause, selling properties from a blanket loan is simple for developers and removes the hassle of potentially refinancing or even repaying the mortgage loan for the property and then taking out a new one in the lesser amount.
Finding A Lender Who Offers Blanket Loans May Require A Specialized Look
Because the vast majority of home buyers are single household units that rely on a single mortgage, not all lenders will offer blanket loans simply due to demand. However, if you know the right places to look or have a real estate expert on your side, you will find that many locations can provide you with quotes on terms and rates for your potential blanket mortgage.
Commercial lenders—rather than traditional banks—may be a worthwhile place to start looking, and investing professionals will likely have some recommendations of their own. Additionally, some real estate law firms may be able to connect you with blanket mortgage lenders and help you navigate the process of securing the appropriate agreement for the deal.
Navigate The Legal And Financial Requirements Of Blanket Loans With A Professional
Understanding how to accomplish your real estate goals is not always simple, which is why many people elect to seek advice from skilled real estate legal professionals. At Mathis Title Company, we understand that each person’s home buying journey is unique and requires a personalized touch.
Whether you need title insurance to secure the multiple properties you are trying to acquire under a blanket loan or you simply need guidance on the legal and financial repercussions of such an agreement, Robin Mathis is happy to help. Reach out to schedule an appointment to discuss any questions you may have and establish a relationship with a professional real estate legal team who can help you accomplish your goals.