A Bump In The Road
Our investment property purchase has been going okay so far, but we did run into one snag: We cannot get a normal conventional loan.
When most lenders/banks do conventional loans they normally go through Fannie Mae or Freddie Mac to get it done. Those are both government-sponsored enterprises. If they are not doing this then the loan has to be guaranteed by a private lender which puts more on them. One thing I didn’t account for is that since I am buying the home directly from my employer, Fannie Mae & Freddie Mac will not approve the loan. I got a lot of legal rigmarole, but the short version is that it feels too much like insider trading.
The good news is that the lender I am working with also does portfolio loans so they just switched me to one of those. Portfolio loans are loans that are done and insured exclusively by the lender. They also keep and manage the loan. Since it is 100% their money, they can set whatever requirements that they please. There was one that I qualified for, so my mortgage loan officer moved me to that one. The catch with portfolio loans is that they typically have higher interest rates, origination fees, and down payments. Thankfully, all my fees and down payment are staying the same (we were already putting 20% down), so the interest rate is the only potential concern. I say potential since this home is still being built and therefore, I cannot lock in my interest rate just yet. So, we’ll see how much this will affect me closer to closing.
All in all, I learned something new through this which I guess is good. I’m also really happy with my mortgage loan officer since she found this out pretty quickly. If there were no options for us, we would have been able to get our deposit back since we were in the contingency window. Thankfully, they offer a lot of loan options. That’s why I work with them in the first place.
We had a minor bump in the road, but we’re still making it through this process. 😊
Feature Photo by Nature Uninterrupted Photography on Unsplash
Fingers crossed that you’ll be able to lock in a good rate! About when do you expect the building to be completed?
Definitely, fingers crossed for that. It’s looking like June/July-ish at this point.
Thanks for reading!