For all of you worried about getting your first mortgage or having more than one, just compare yourself to me for a quick reality check. I have six mortgages right now! Yes! Six whole mortgages.
The thought of having even more than one is scary for sure but if you are confident about what you are doing and know that this debt is good debt, then it shouldn’t be a problem. I am super confident and not afraid one bit of all this mortgage debt I have because I am making money on every single one of them except for my primary house. For example, on my turnkey rental #3, my total mortgage amount with insurance, taxes and everything is $396.71. Total!! I am renting that house out for $1,050. See what I’m talking about here people?! Making money!!
I mean think about this for a second, if you can use the bank’s money to invest in a real estate property where you are making way more returns then what you are paying in interest, its kind of a no brainer. This is how the rich get rich folks! Look at Donald Trump for example. He has all the money in the world to buy whatever he wants out right, yet he still chooses to use other people’s money to invest. Doesn’t matter how he gets the money, mortgage, private loans, investor loans, whatever. He knows that it is a smarter decision to leverage someone else’s money to make him more money.
Of course not everyone can do this. You have to have the knowledge, expertise and know how to use the debt properly so that you are making money. Other wise you’re just in debt and making matters worse. Not what you’re looking for! Unfortunately according to Robert Kiyosaki who discusses the 90/10 rule on debt. He states “10% of the borrowers in the world use debt to get richer – 90% use debt to get poorer”. Folks you obviously need to be part of that 10%.
But the real issue is how in the world do people even get multiple mortgages or get qualified to get this many. I always wondered the same question myself and as I started acquiring more properties, I just dove in and figured out what banks would work with me. Not all banks will lend you multiple mortgages and most banks will cut you off after having four mortgages. It takes time to finally find a bank that is willing to work with you. I found a smaller bank based out of Cincinnati, OH that is more than happy to give me more then 4 mortgages, and will give me up to 10 as long as I qualify. Awesome! I love my lender and will use up all 10 mortgages for sure.
But that is the kicker my friends, how to qualify for these loans. I am no expert in lending nor am I offering professional advice on how to do this but I will share with you below the criteria that was used on me on how to get more than 4 mortgages. If you have similar traits, then you should also not have a problem getting multiple mortgages.
1) Credit Score
- This is one many people will fail to have but my bank has told me the minimum credit score they will accept is a 720 score. This is what they call “A paper”. They love people with high credit scores. Obviously to have this type of score you must never have late payments, bankruptcies or any other financial disasters.
2) Income Verification
- In order to borrow money, you need to be making money! Ha, kind of weird the way that works but luckily for me, I have a decent paying day job where I am able to provide proof that I am getting paid on a regular basis. This is one of the only reasons why I do like having a day job right now. Although Im trying to eventually quit the rat race and not ever have to work for anyone, it would be very difficult for me to qualify for mortgages without a job like that so for now, I need to keep this job.
3) Bank Statements
- Lenders want to review 2 months of all your bank statements and review with a fine tooth comb all the money going in and out of your accounts. They need to make sure it makes sense and adds up with the income you have reported that you make. No funny business and nothing shady or they will look down on this.
4) 25% Down Payment
- For mortgages 2 – 4, it is apparently a requirement to do at least a 20% down payment on the investment property. For mortgages 5 – 10, that number bumps up to 25%. So you need to show proof with your bank statements that you have this much money in your accounts to pay the down payment. If it magically shows up on your last bank statement, they will ask questions. They prefer to see this money in your account and have it show up on your last 2 months of bank statements.
5) Cash Reserves
- Another criteria they have is for you to have a minimum cash reserves available to pay up to 6 months worth of mortgage payments for ALL your current mortgages and the one you are trying to get. Yes this could mean you have to have a lot of liquid cash/assets available. Lucky for me, my stock options count as cash reserves and I don’t touch that account. So I fit this criteria by just showing them the amount of money I have available in my stock options. 401ks, IRAs, Stocks and other types of investments can count as well for you. It doesn’t have to be cold hard cash in your bank accounts to satisfy this need.
6) Tax Returns
- I had to provide my last two years of tax returns and prove I have been making decent money in those past two years. I think the key here for the bank is to show consistent income behavior.
Those are the main attributes that were used and how I got more than four mortgages however you need to be aware that all banks are different and may have different criteria. For me, having those attributes has allowed me to get my six mortgages and as long as I dont screw it up, I should have no problem getting up to ten mortgages.
Sound crazy to you or what?