Not everyone has a conventional financial situation, and sometimes having an untraditional source of income makes it more challenging to secure home financing. Portfolio loans can offer home financing options for people who may not normally get approved for a conventional mortgage. If you are interested in buying a home, but are not able to meet certain specifications for a conforming loan in Knoxville, Maryville, Lenoir City, Oak Ridge, or Gatlinburg, Tennessee, contact Foundation Mortgage. We can help you determine if a portfolio loan is a favorable option for you.
What Is a Portfolio Mortgage?
A portfolio mortgage is a type of loan that is created by a lender and then held in a portfolio for the duration of the loan. Typically in the conventional mortgage process, the lender sells the debt amount to a third party such as Freddie Mac or Fannie Mae. These conventional mortgages are required to meet specific guidelines set by the third party buyers, and in certain instances, a mortgage does not meet these guidelines. The loans that don’t meet the set guidelines are called “portfolios loans” because the debt is not sold off and subsequently becomes a part of the lender’s portfolio.
Portfolio loans come with certain benefits, although they may not be the right loan type for everyone. Portfolio loans typically do not require home buyers to have private mortgage insurance, which can save money throughout the duration of the loan. When you obtain a portfolio mortgage, you will be working closely with the same lender throughout the life of the loan, which could be beneficial if any issues arise. Perhaps the main advantage to securing a portfolio loan is that the qualifying requirements are not as strict as traditional loans, allowing people who would not normally be able to qualify for home become eligible for financing.
Who Should Apply For a Portfolio Loan?
Many borrowers who apply for a portfolio loan are either self-employed, perhaps have had a recent bankruptcy or foreclosure, or tend to have a less than ideal credit score. Since self-employed borrowers may not be able to provide tax returns that accurately represent their income, they often apply for portfolio loans because of their unique eligibility requirements. People also may seek a portfolio loan when the borrower needs to take out a loan that exceeds conforming loan limits, to fix and flip a home, or to take out a second mortgage.
Applying for a Portfolio Loan
Whatever your financial circumstances may be, the loan specialists at Foundation Mortgage can work closely with you to help determine the best mortgage option for your financing needs. If you are looking for a home in Knoxville, Maryville, Lenoir City, Oak Ridge, or Gatlinburg, Tennessee, contact us today for a consultation.