Home Buying in Watsonville>Question Details

Debbie, Home Buyer in Watsonville, CA

Hi, does anyone know if there is still a limit on how many investment properties a person can have mortgaged? It was 10, then 4 after the market

Asked by Debbie, Watsonville, CA Fri Jun 18, 2010

collapsed. Also, I don't know if it would be best to buy a home which I plan to retire to as a 2nd home or investment property. What are the main differences?

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4
John Mondello’s answer
Debbie,

Up to 10 per Fannie Mae guidelines. I just crossed the threshold of 4 about a month ago. Took a little patience because a lot of the larger banks and lenders (Chase, Wells Fargo) will still not do more than 4 but the lenders should be able to find you something.

My guess is that the banks are overcorrecting in reaction to what's transpired over the past year or so and that they are allowed to be more restrictive than Fannie Mae guidelines if they choose.

John J Mondello Jr, Realtor
Keller Williams
(225) 329-8119
"I find the house, you make it home."
0 votes Thank Flag Link Sat Jun 19, 2010
I partially agree with Molly. We lend directly thru Wells Fargo and 4 is about the max, otherwise it is an exception. Your rental income though can be used providing you have it listed on your tax return (Sch E) and we can also look at current leases. The difference between buying as a second home vs. investment property would be the interest rate. The rate on a second home, is the same as a primary. Investment properties are considered the highest risk and depending on loan to value and credit score, the rate would be higher. Good luck searching!
0 votes Thank Flag Link Fri Jun 18, 2010
You can have up to 10 in your name. However, I would not suggest it. Look into Land Trusts. The concept is to limit your liabilities with regards to your investment properties. The goal is to separate your personal assets from your investments and your investments from each other. You would have one Land Trust per property. Contact an attorney before moving forward. Laws are different in every state.

There is more to it than that but I just wanted to give you the concept. Below is a link to a site where you can get some information. I have not used or worked with this company and I am not recommending them. I just liked their site.

Best Regards,

Eric
0 votes Thank Flag Link Fri Jun 18, 2010
You can only have 4 mortgages now with most reasonable lenders... so 2nds count... and the interest rate and down payment % rules on a 2nd home are easier then with an investment property- but your income needs to be able to support both mortgages and rental income can't be used to qualify. I work with a couple of GREAT lenders with good ethics and reasonable rates/fees if you need a referral... when I owned my own Realty office, I was the in-house lender... now I just sell real estate and I live in the Watsonville area so if you're looking for something specific, I'd be glad to help.
CHEERS!

Molly Thompson, Broker Associate APR
0 votes Thank Flag Link Fri Jun 18, 2010
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