Should we try an asset based loan? If so, what banks would do this?

Asked by Tara, Harleysville, PA Sun Oct 28, 2012

We have 22 rental properties (8 under 1 mortgage so a total of 12 mortgages), which is the majority of our income. We are trying to get a new home that is actually less than our current home mortgage, but have been unsuccessful as the lenders are saying our debt to income ratio is too high. We were trying to put 20% down...even more if necessary and still unsucessful even though our financial status is still the same as it was when we got our home mortgage 3 years ago and our credit is excellent. Anyone have any ideas or tips for us?

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9
Bruce Ailion, Agent, Marietta, GA
Sun Oct 28, 2012
BEST ANSWER
There are several avenues to explore. It very well may be true that you will not qualify for a home loan insured, guaranteed, by the government or sold to Fannie Mae or Freddie Mac which limits your ability to get a mortgage. Having less than 10 outstanding loans is another barrier to financing. Selling three of your properties, generating cash and hopefully capital gains, and reducing debt might open up the possibility of a traditional loan.

The problem you face is that the lending market is unusually conservative right now. It is a mechanical rule driven decision process and for most loans lender discretion is not an option. If you do not fit the profile you will not get a loan.

Asset based lending is expensive and unless you have a fabulous deal and plan on using the money short term, under 1 year financially it is probably a mistake.

In all probably there are small commercial banks and credit unions within a 50 mile radius. I am thinking of institutions with an asset values below 250M. My experience is that it is not too hard to reach a senior executive in these smaller banks and discuss short term financing, something like a 3 year 5 year term loan. You will pay an elevated rate above current mortgage rates but not the credit card plus rates of asset lenders. These smaller institutions are looking for and happy to find safe higher than market yields.

I would explore this avenue before looking at other alternatives.


Bruce Ailion,
RE/MAX Greater Atlanta
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0 votes
Marc D'Angelo…, , Roswell, GA
Tue Jan 14, 2014
You need to see if your Lender offers the possibility of Limited Documentation loans. Our Bank offers Bank Statement loans that require 20% down and very good credit. Give me a call to discuss.

Marc D’Angelo
Mortgage Banker
678.442.3405 Office
678.985.6834 Fax
404.925.8291 Cell
mdangelo@brandmortgage.com
apply online: mdangelo.brandmortgage.com


50 Chastain Center Blvd. | Kennesaw, GA 30144
NMLS# 75615 | 658834
1 vote
Charles.sail…, Home Buyer, Los Angeles, CA
Tue Jan 7, 2014
Charles Sailor,

We have an asset based lending platform directly for yopur situation with competitive rates

1 800 794 7682 Ext 5213
0 votes
Charles.sail…, Home Buyer, Los Angeles, CA
Tue Jan 7, 2014
Charles Sailor

We have an aset based lending platform directly for this type of lending solution.

With very copetitive rates

1-800 669-2455 Ext 5213
0 votes
, ,
Sat Nov 3, 2012
Minimum 20% , prefer 30% down. Note investor will be used. This is considered a refinance of the mortgage on the property in question, not as a purchase, so Realtor commission must be dealt with from buyer side. DTI is not an issue. Loan based on credit, mortgage history and down payment. Interest rate 6% or higher but can be negotiated. 2 week closing needed.
0 votes
David Karami…, , Atlanta, GA
Wed Oct 31, 2012
Tara,

As many have said below, you're in a situation that wont allow you to get traditional financing as your scenario is definitely outside of the box. I highly recommend what Bruce Ailion indicated regarding small Community Banks & Local Credit Unions as they have the ability to create something that caters to your specific circumstance.

Good Luck!!

Thanks,
David

David Karamitros
The Karamitros Group
Brand Mortgage
Retail Sales Manager


3328 Peachtree Rd NE
Suite 200
Atlanta, GA 30326
770.237.1791 Office
Email: dkaramitros@brandmortgage.com
0 votes
, ,
Mon Oct 29, 2012
Hi Tata,
I am not aware of any mortgage lenders offering an asset based mortgage. When you have that many financed properties, you are going to run inot many barriers.

You mentioned that everything is the same as when you last purchased 3 years ago. What it doesn't sound like you are factoring in is the new purchase. You were probably at the maximum the last time around and you just did not know it.

Working on your debt to income ratio is the best solution. Lenders do not want borrowers who are over extended and cannot meet their monthly obligations with a verified cash flow from acceptable sources.

Regards,
Rodney Mason, NMLS #151088
Sr Loan Officer
Prospect Mortgage
825 Juniper St NE, Atlanta, GA 30308
Office: (404) 591-2453
rodney.mason@prospectmtg.com
Apply Online at http://www.rodneymason.com
Licensed in Alabama & Georgia

Prospect Mortgage offers a full selection of mortgage programs including:
Conventional | FHA | FHA 580-639 FICO | FHA 203K Renovation (Streamline & Consultant) | HomePath® | HomePath® Renovation | HomeStyle® Renovation | VA | USDA | GA Dream | Jumbo Financing
0 votes
The new home we are looking to purchase is actually less expensive than our current house. We'd again be putting 20% down. Do you suggest selling some of the rentals to lower debt? We have no other debts (no credit card debt, no car loans, etc.)
Flag Sat Nov 3, 2012
Stephanie Mc…, Agent, Canton, GA
Sun Oct 28, 2012
Reducing debt may be the only answer.Guidelines are tight for all borrowers
0 votes
Rick Musto, Agent, Roswell, GA
Sun Oct 28, 2012
Best thing to do is talk with a good mortgage broker. Not sure what bank you talked with but I have done deals like with this my investors and having a good mortgage broker opens up many possibilites to you as they have mutliple sources of funding. The large banks don't like this kind of stuff generally...not a cookie cutter deal for them! Good luck.

Rick Musto, Managing Broker
Buckhead Home Realty
770-480-7699
rmusto@buckheadhomerealty.com
0 votes
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