Portfolio Loan
Definition:
A Portfolio Loan is a type of mortgage that a lender keeps in its own investment portfolio, rather than selling it to investors in the secondary mortgage market. These loans typically have more flexible underwriting standards, as the lender has more control over the terms and risk. Portfolio loans are often used for unconventional properties or borrowers who don’t meet the criteria for traditional mortgages.
🔍 Did You Know?
Because portfolio loans are held by the lender, they can be tailored to the borrower’s specific needs, allowing for exceptions that might not be available in conforming loans.
Examples:
Example 1:
An investor with multiple properties secures a portfolio loan for a non-standard home that doesn’t meet the requirements for a conventional mortgage.
Example 2:
A self-employed homebuyer with inconsistent income secures a portfolio loan with flexible terms from a local bank that keeps the loan in-house.
Why It’s Important:
Portfolio loans provide an alternative for borrowers who might not qualify for conventional financing. They offer flexibility and customized solutions for investors or borrowers with unique financial circumstances.
Who Should Care:
- Borrowers with unconventional financial profiles.
- Real estate investors financing unique properties.
- Lenders holding mortgage loans in their portfolios.
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