Non-Recourse Frequently Asked Questions
Q: What is a Non-Recourse loan?
A: This is a loan in which the owner of the IRA is not personally liable for the repayment of the loan. Simply said, the bank’s security is the property itself and there is no recourse against the owner of the IRA. In the event of default, the property is the only source of repayment.
Q: How can I apply for a Non-Recourse loan?
A: Complete the enclosed application and return to First National Bank of America by email, fax, or mail.
Contact data is as follows:
Address: First National Bank of America
attn: Chad Springer
4660 Kalamazoo Ave. SE
Grand Rapids, MI 49508
Q: Who is eligible for a Non-Recourse loan?
A: Anyone who has the required 40% to 50% down payment available in their self-directed IRA. This is subject to underwriting approval which will include satisfactory review of the subject appraisal and liquidity verification.
Q: Can properties be held in a LLC?
A: Yes, this can be done. Please consult with your tax and/or legal advisor or IRA administrator.
Q: What is the processing time for a Non-Recourse loan?
A: Typical processing time is 30 to 45 days from application to close.
Q:Is your program offered in all 50 states?
A: FNBA will finance 1 to 4 family homes in all 50 states. 5+ unit properties need to be located within the state of Michigan.
Q: Can FNBA set up my Self-directed IRA?
A: No. You will need to select your own administrator.
Q: Is there an income requirement for my rental property?
A: Yes. The property must generate net operating income that exceeds debt payments by 20% to 25%.
Q: Do you require an escrow account for property taxes and insurance?
A: Yes. Both will be included in your monthly payment.
Q: What type of rental properties are eligible for FNBA’s program?
A: Single family residential, duplexes, 4-plexes, and multi-family.
Q: What terms are available?
A: 1 year interest only, 3, 5, 7, and 10 year balloons with up to 20 year amortizations are all available.
Q: What fees and costs will I pay for a Non-Recourse loan?
- 1 to 3% origination fee
- $250 Underwriting fee
- $595 appraisal fee (due with application)
- $1,500 attorney reviewed/prepared closing documents
- Title insurance, pre-paid taxes & insurance, mortgage recording, and settlement fees will
vary depending on your location and purchase specifics.
Q: What information will I need to include along with my application?
A: Please review the “Required Documentation Checklist” included with the application packet.