{"id":1236,"date":"2021-02-10T06:00:45","date_gmt":"2021-02-10T11:00:45","guid":{"rendered":"https:\/\/www.deeds.com\/articles\/?p=1236"},"modified":"2024-04-25T23:20:03","modified_gmt":"2024-04-26T03:20:03","slug":"two-properties-one-mortgage","status":"publish","type":"post","link":"https:\/\/www.deeds.com\/articles\/two-properties-one-mortgage\/","title":{"rendered":"Two Properties, One Mortgage?"},"content":{"rendered":"\n
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The Pros and Cons of\nConsolidating Your Home Loans <\/em><\/strong><\/p>\n\n\n\n

Can money be lent for multiple houses through one mortgage?\nIt can. A number of scenarios could count as multiple properties and one\nmortgage. Here, we look at a few examples.<\/p>\n\n\n\n\n\n\n\n

One Mortgage for Multiple Properties<\/h2>\n\n\n\n

Yes, one mortgage can cover two residential properties. In\nsome cases, two houses stand on a single piece of land, with two separate\naddresses. If you are interested in financing a property like this, check your\nlocal bank or credit union and ask whether they work with portfolio loans. The portfolio\nnote<\/em> is kept in the bank and not resold to another institution.  <\/p>\n\n\n\n

Two purchase agreements are needed if there are two distinct\ntax parcels. It\u2019s an excellent idea to consult with a real estate attorney, and\nto be sure you are titling your new purchases correctly.<\/p>\n\n\n\n

If the two homes are in different counties, the mortgage\nlien for the primary home should be recorded first, with the filing fee paid in\nthat county. Then, the recorded documentation should be filed, with another\nfiling fee paid, in the second county. Each recording of the mortgage lien must\nspecify the distinct street addresses, legal descriptions, and tax parcel ID\nnumbers.<\/p>\n\n\n\n

Consolidating Multiple Home Loans<\/h2>\n\n\n\n

In yet another scenario, one mortgage is created from two by\na homeowner with multiple mortgaged properties. The idea is to consolidate debt\nso only one home is left with a mortgage lien on it. <\/p>\n\n\n\n

The owner can accomplish this feat by drawing on equity\nbuilt up in a primary home, to pay the balance due on a second property,\nessentially through a cash-out refinance loan. Typically, the new, combined\nloan is a larger loan than the primary home previously carried, with a higher\ninterest rate, in place of two loans with their own particular rates and terms.\n<\/p>\n\n\n\n

Then, the owner receives a release from the other mortgage.\nThe county records should now reflect the payoff and release. Check to be sure.<\/p>\n\n\n\n

What if you\u2019re living in the first home, and treating the second\nhome as a rental property? You will likely be approved for a higher total loan,\nrelative to the property value, on the primary home. To avoid the burden of private\nmortgage insurance<\/a>, the loan-to-value ratio should be no higher than\n80%.<\/p>\n\n\n\n

Pro tip:<\/em><\/strong> An accountant can help break down how\nthe new financial arrangement would help with overall debt, while at the same\ntime anticipating the likely tax impacts. For just one example: If an\ninvestment property is no longer subject to a mortgage and interest payments,\nwill the government tax more of the income it generates? <\/p>\n\n\n\n

The Blanket Mortgage Loan<\/h2>\n\n\n\n

The blanket mortgage<\/em>, which bundles several mortgage\nloans together, is an option for investor-buyers who need to keep track of\nfinances across their real estate holdings. Each property is under the single\n(\u201cblanket\u201d) set of loan terms. Every property still needs its own title search,\nappraisal, and insurance.    Blanket loans can cover all the properties in\na particular state that the buyer wishes to include \u2014 but no additional properties\ncan be brought into the fold after closing. <\/p>\n\n\n\n

The blanket loan offers several advantages. It enables buyers\nto apply for just one mortgage. After the properties are successfully\npurchased, one monthly mortgage payment will cover them all. Equity loans and cash-out\nrefinancing are available to help the owner handle repairs or pursue future deals.<\/p>\n\n\n\n

There are a few more aspects to consider. Because it\u2019s treated\nas a commercial undertaking, the blanket loan is a pricier loan product than a\nstraight residential mortgage. The applicant will need to be sure the higher\ndown payment, closing costs, and interest rate are offset by the ability to\nhave just one, unified closing.<\/p>\n\n\n\n

Also, the buyer needs to be clear on the plan to sell any of\nthese properties later. All the properties are tied to the loan, making it\ntricky to sell or refinance just one of them at a time. Will the lender release\nthem from the mortgage individually? Real estate lawyers may draft these loans\nwith partial release<\/em> provisions, empowering owners to keep the mortgage\nintact when selling or refinancing individual properties from the batch. <\/p>\n\n\n\n

Here again, if you are interested in a blanket loan, it\u2019s\nbest to check first with an investor-focused local bank or credit union that\nworks with portfolio loans. A mortgage broker near you will have more\ninformation on where to look. <\/p>\n\n\n\n

Combining a First and Second Mortgage<\/h2>\n\n\n\n
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A second mortgage on a home can take the form of a home equity loan<\/em> (HEL), which is one-time loan with a fixed rate, or a home equity line of credit <\/em>(HELOC), which is a credit line with variable rates. If a second loan is attached to your house with comparatively high interest charges, and you want to take advantage of the current low rates<\/a>, consolidating debts could be a smart financial move. It\u2019s best done at a time when the owner does not plan to take out any other loans, as the new debt arrangement can unsettle the owner\u2019s credit score. <\/p>\n\n\n\n

To decide if this is the right move at the right time,\nexamine the closing costs and the total amount on the new loan, and how quickly\nit will be paid off. Compare your currently projected costs against what you\nwill save over time with the lower rate. And don\u2019t forget how points can weigh\nin.<\/p>\n\n\n\n