Freddie Mac Supplemental Loans
Freddie Mac Supplemental Loan Highlights
Advantages of Freddie Mac Supplemental Loans
These loans have a number of potential benefits to offer to borrowers, including:
- Access To Funds: These loans provide access to additional funds that borrowers need, which allows the borrower to avoid the costly and time-consuming refinancing process.
- Supplemental Loans Allowed: It is possible to obtain more than one supplemental loan allowing borrowers to meet their needs on a continuous basis.
- Split Supplemental Loans: It is possible to utilize split supplemental loans with these Freddie Mac property loans. That means that these loans can be placed alongside the original loan at the same time.
- Interest Rates: The interest rate on these loans tends to be highly competitive and within reach of most borrowers when compared to other borrowing options.
Disadvantages of Freddie Mac Supplemental Loans
These loans carry some risks and a few disadvantages as well compared to other loan options:
- Servicing Fee: There is a servicing fee required, and it can be substantial in some cases. The amount is dependent on the amount of the supplemental loan.
- Replacement Reserves: Lenders will require replacement reserves to be available.
- Third-Party Reports: There are third-party reports that are a necessary requirement. This includes an Appraisal, Phase 1 Environmental Assessment, and a Physical Needs Assessment. In addition to this, for properties that are located within Seismic Zones 3 and 4, there is also a seismic report required as a part of obtaining these.
- Additional Fees: There are fees involved in these loans, including a fee of $2,000 or 0.1% of the amount borrowed for the loan, whichever figure is larger. There is also a $15,000 lender application fee that can help to cover the costs of underwiring and third-party reports. There is also usually an origination fee.
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Freddie Mac Supplemental Loans FAQ’s
Freddie Mac Supplemental Loans provide an opportunity for borrowers to obtain additional funding to meet their goals. These loans may be available to use for upgrading property or for other needs. These loans provide as much as $1 million in additional funding and provide a loan-to-value allowance on those properties of up to 80 percent, making them highly accessible to many borrowers. The loans are also non-recourse, which means that borrowers do not have to worry about personal responsibility for these funds. For those developers or property owners that need additional funding to cover costs or to better enhance their properties, these loans can be an exceptional option.
There are two options available for these loans. Split supplemental loans are offered at the same time as the original Freddie Mac loan. Seasoned supplemental loans are a second option that becomes available 12 months or longer after the original Freddie Mac loan is taken out.
Yes, there is typically the availability of an early rate lock with these loans. This includes 60 to 120 days prior to the purchase. It is also possible to utilize fast-track early rate lock as well as index locks, both of which could be beneficial to some borrowers.
There are limits, including those applied by the lender. These loans are typically unlimited though they are subject to terms and conditions. Also notable, if there are under five years left on the original term, then the lender may quire the supplemental loan sizing to be based on more risk analysis.
Yes, it is possible to obtain more than one supplemental loan during the lifetime of the original Freddie Mac loan. The only limitation is that there must be at least 12 months between the original loan origination and the start of the new loan.
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“I would like to thank you in helping me purchase the 20 unit apartment building. You guys were very helpful and found me a good rate! I closed yesterday and I can’t thank you enough.”