The How, Who, When and Where of Portfolio Loans

Portfolio Loans are one of Great Midwest Bank’s best-kept non-secrets.

A Portfolio Loan may be another option for those who don’t fit the conventional loan “box.” A Portfolio Loan is a home loan that stays in a lender’s investment portfolio for the full duration of the loan — part of our common sense approach to lending. Approval for a Portfolio Loan is not guaranteed, but we will explore every possible solution for you after an in-depth financial evaluation during the application process.

We’ve previously covered what Portfolio Loans are and why they’re used — so let’s explore the how, who, when and where!

How do Portfolio Loans work?

When you establish a conventional mortgage loan with a lender, your mortgage most often does not stay with that lender. Conventional mortgage accounts are often sold to Fannie Mae (Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Corporation) and FHA (Federal Housing Administration) and therefore are taken out of the original lender’s accounts and control.

For this reason when setting up conventional mortgage loans, lenders must follow those entities’ strict guidelines when deciding whether or not to approve a loan. By ensuring those guidelines are met, the original lender is also ensuring they will have the option to sell the account to Fannie Mae or Freddie Mac in the future.

[LTV, PMI, FHA & FNMA – What do all these acronyms mean?]

Portfolio Loan accounts stay funded directly by Great Midwest Bank, however—always remaining in our investment portfolio. Rather than focusing on checking all the boxes needed for a conforming mortgage loan, we meticulously go over your application to get a complete picture of you and your circumstances.

Our skilled and friendly loan officers analyze your income and cash flow instead of just tax returns and traditional credit. This helps us make common sense Portfolio Loan decisions. The loan is part of Great Midwest Bank’s own portfolio, which allows us the freedom to extend loans to those who qualify under our own lending standards. When we offer a portfolio mortgage, it is our responsibility to service the loan from start to finish.

Portfolio Loans offer peace of mind. If anything ever comes up regarding the loan that needs to be addressed, we will work with you directly. We have the flexibility to set the guidelines for the loan based on our common sense approach to lending—and we will do that while keeping your best interests and needs in mind.

[What is common sense lending?]

Pros and Cons of Portfolio Loans

Like any financing option, there are pros and cons of Portfolio Loans. You can expect some trade offs when you get a Portfolio Loan versus a conventional mortgage loan. Portfolio Loans allow more flexibility in loan approval requirements, and you may secure approval more quickly. However, one thing to keep in mind is that Portfolio Loans may include higher interest rates and origination fees.

Pros:

• Qualifying may be easier and quicker than other loan types
• Alternative to Federal Housing Administration financing
• More flexible underwriting, since Great Midwest Bank uses its own funds to finance the loan
• Serviced locally in Wisconsin when established with Great Midwest Bank, allowing for a more custom-fit loan experience

Cons:

• May have larger interest rates
• May include higher origination fees
• Repayment schedule can be tighter

Who qualifies for a Portfolio Loan?

Is a Portfolio Loan the right option for you to pursue?

Although they are a less standard fare, Portfolio Loans serve a specific purpose—providing another option to people who have already explored other loan routes.

Great Midwest Bank knows that unique circumstances may prevent responsible borrowers from fitting into the standard mortgage loan “box.” We do not guarantee everyone will qualify, but our helpful loan officers will explore your whole situation to determine all your options.

Consider your current wants and needs. Have you been dreaming of buying a home, and you fall under one of the common Portfolio Loan-appropriate situations we discussed?

Common Situations for a Portfolio Loan:

• Self-employed, with irregular income
• Have non-traditional credit
• Face judgments, liens, tax issues, or temporary financial hardship
• Going through a job transition
• Purchasing a property that doesn’t fit conventional loan standards (unique properties, certain condominiums, vacant lots, investment properties)

If one of these circumstances is the hurdle between you and a conventional mortgage loan, a Portfolio Loan could be an option. Talk to a loan officer at Great Midwest Bank to see if a Portfolio Loan is right for your particular needs. Our staff is knowledgeable and friendly, and are happy to help assess your options.

When could I secure a mortgage with a Portfolio Loan?

If you’re having trouble securing a conventional mortgage loan, it may lead you to consider whether or not now is the time to pursue a home purchase. The answer depends on you, your needs and your situation. Here are a few things to consider.

Portfolio Loans can help individuals get into the housing market sooner. People may need to work for months or years to get to the point where they can secure a traditional mortgage loan. Portfolio Loans can be a way for qualified borrowers to decrease their wait on pursuing a home purchase.

Consider that refinancing is an option later on, too. Perhaps you can secure a Portfolio Loan for the time being, then refinance to a traditional mortgage option when your financial situation gets better.

A loan officer at Great Midwest Bank will help you determine if a Portfolio Loan could be the key to your new home, and if now might be the right time. Up for a casual conversation? That’s all it takes to get started! We’ll go from there to evaluate your options.

[CRA Loan Officers: On Your Home Team]

Where can I get a Portfolio Loan?

Great Midwest Bank keeps it Simply Local. Portfolio Loans stay with Great Midwest Bank, right in your community. You won’t need to worry about the loan being sold to a second party, which means you will get personalized and straightforward service for the whole duration of the loan.

When you do business with Great Midwest Bank, your money stays in the community. Banking locally allows banks like us to extend more loans to more people in the area. That helps other locals secure a home of their own, too. Keeping funds local is wonderful for the Wisconsin economy. You can invest in your home and invest in the local community at the same time.

At Great Midwest Bank, we also understand that the loan process can seem intimidating—especially when you are in a unique circumstance. Rest assured that we will explore and explain all your options. No pressure, no worries, because you’re working with Great Midwest Bank. We strive to make everything straightforward and approachable for our customers.

[Why do community banks matter?]

Is a Portfolio Loan right for you?

If you’re considering your loan options, stop by one of our local branches or give one of our friendly local loan officers a call for more information. As Wisconsin homeowners and experienced loan officers, we know how to set locals up with the best loan solutions. At Great Midwest Bank, we strive to make the loan process relaxed and easy for you. Experience a state of Bankquility^Ⓡ today!