Blanket Mortgage
Definition:
A Blanket Mortgage is a type of loan that covers multiple properties under a single mortgage agreement. Blanket mortgages are often used by real estate developers, investors, and builders who purchase or refinance several properties at once. This loan simplifies the financing process and allows the borrower to sell individual properties without having to pay off the entire loan.
🔍 Did You Know?
Blanket mortgages often include a "release clause," allowing the borrower to sell or refinance individual properties under the blanket without triggering a complete repayment of the loan.
Examples:
Example 1:
A real estate developer uses a blanket mortgage to finance the construction of 10 homes in a new subdivision. As each home is sold, the proceeds are used to release the property from the loan.
Example 2:
An investor purchases five rental properties using a blanket mortgage, allowing them to manage a single loan instead of taking out separate mortgages for each property.
Why It’s Important:
Blanket mortgages provide a flexible financing option for investors and developers looking to manage multiple properties with one loan. This simplifies loan management and can save on transaction costs and time.
Who Should Care:
- Real estate investors with multiple properties.
- Developers financing large projects or subdivisions.
- Lenders offering commercial and investment loan products.
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