Written By Tina Manshum – Brighton/Okemos Mortgage Branch Manager
With most mortgages, the originating lender does not hold onto the loan. Instead the loan is sold on the secondary mortgage market. However, there are some exceptions that are not bought and sold – portfolio loans. A portfolio loan does not conform to the requirements of a typical Fannie Mae or Freddie Mac loan. Since portfolio loans fall outside of the typical stringent conforming loan box, lenders keep these loans in-house to service them and take on the risk instead of selling the loan to another company. If you are having a hard time securing a conventional, FHA, VA, or USDA loan, you may want to consider this as an option.
Tough situations can happen to good people. Portfolio loans provide flexibility for your loan officer and underwriter to fully understand your unique financial situation and the life events that attributed to your financial challenges. There are a wide range of borrowers and situations this type of loan can assist with.
For example, a portfolio loan may benefit a self-employed borrower that uses typical tax deduction methods, but does not meet the criteria for a typical loan. Having a portfolio loan product to use allows the lender more flexibility to review other facets of the borrower’s business, assets, credit, and equity to allow financing when it may not have been possible before.
Portfolio Loans may provide solutions for those with these circumstances:
- Self-employed individuals
- Recent bankruptcy or foreclosure
- Unexpected time off work, resulting in loss of income that affects payment history
- Life event caused a credit problem, but you are now back on track
- Property that doesn’t fit typical guidelines – i.e., non-warrantable condo
- Jumbo loans
- High Net Worth/Low Income qualification options
- Those with no credit score or a credit score under 620
- Cash out while paying off a land contract
Remember, these loans are for qualified borrowers that don’t fit typical mortgage requirements. If you fall outside the normal mortgage guidelines this may be the right mortgage loan for you! Here at Michigan First, we are experts in understanding your whole situation.
Contact a Michigan First Mortgage loan officer to explore your homebuying options.