Mortgages March 14, 2018

Another Loan Option: Cross Collateral

Another Loan Option: Cross Collateral.

Having a home to sell, where you need to sell it to buy that new home has a couple of good options. For those over 62 a reverse mortgage may do the trick. I have written other articles on them, click here.

A second option is a cross collateral loan. A Cross-Collateralized Mortgage is a one loan that uses multiple (at least two) properties as collateral for the loan. The mortgage is “cross-collateralized” against multiple properties to provide additional security to compel the lender to make the loan.

The main two benefits of a cross-collateralized mortgage are: 1- the additional security compels the lender to make the loan, 2- Given the additional value multiple properties bring to the table, the borrower may have a lower LTV, thus lower price on the loan. Generally Cross-Collateral Loans are made by private banks or portfolio lenders as there is no secondary market for this type of loan.

The way they work is that when the former home is sold, the equity reduces the loan amount on the remaining property. In some cases this could be the entire amount owed.
I find that my background as a loan officer and former owner of a mortgage company helps my clients work through their options in what can be a tricky part of purchasing.
FYI, I send my clients to dependable loan officers. The last thing one wants is to have a crash in or near the end of the loan process. Don’t use your local bank or savings and loans. I have horror stories to share with you. To make the point, if you don’t close on time you could be out in the cold. Or if in July, out in the heat. I only recommend loan officers that  you can count on. That means they have the experience and the tools to quickly determine you loan capacity. You will be dealing with them and only them during the process. You wont be passed around to the on duty guy or gal. You won’t be required to use a title company out of Chicago who could give a rip if you close on time. YOU DON’T WANT A CRASH! So, please take this counsel, use one of my recommended loan officers. Please please plese, for your own happy ending.