Collateral covering several loans under a single security agreement, also called a dragnet clause. In essence, collateral for each loan backs the entire package of loans.

Cross-collateralization is also a great tool for someone that has found a house to buy before selling their current residence. Usually, such borrowers would have to wait for their house to be sold, and possibly accept a lower purchase price than they should in order to sell quickly. To find out more call your loan officer at 414-303-1215 or email at msearing@mayfairmortgage.com.

A popular application of cross collateralization is the "blanket loan".

In a blanket loan, multiple properties are placed under the same master mortgage, and their combined equity collateralizes the loan. You can think of it as a consolidation of all your many mortgages into one loan. Cross collateralized mortgages are a popular tool for real estate investors managing multiple rental properties and high net worth individual homeowners with multiple residential properties.

 

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