Learn To Be A Fix & Flip Investor: commercial mortgage lender

Showing posts with label commercial mortgage lender. Show all posts

Sunday, September 24, 2017

Three Factors to Consider When Evaluating Commercial Loans

Commercial loans are a great way to help to grow your business but there are a few facts that you need to be sure to understand. Knowing exactly what it will cost you to borrow money is an important factor in deciding if you are making a wise business decision.
Whenever you are considering commercial loans, there are a few factors that you need to take into consideration. It can be very easy to research the process of applying for the loan and all of the requirements so that you have a good knowledge base. But then as you slog through the application process, it can become very stressful. You are supplying years of data and financial information simply to prove your creditworthiness and the character of the business. And the longer you wait the more you begin to worry that you will not get approved. So when the approval does finally come through, you are tempted to quickly sign the documents to get the loan. But you need to carefully evaluate the entire offer and terms.
Knowing if you are being offered a fixed rate loan or a variable rate is important for your future financial planning. The fixed rate will offer you a stable and consistent payment for the life of the loan. A variable rate loan will fluctuate as the market changes and can be very difficult to work into your budget if you have limited funds. The variable rate does offer the potential to save on your interest rate if the rate drops but it also hold the potential for an increase in your costs if the rate goes up. You need to understand and accept the potential risk if you are opting for a variable interest rate.
You also need to look very closely at the interest rate that you are going to be paying. Is it at or near the average rate that you were expecting? If there is a discrepancy then you need to speak to the lender to learn why. The rate should be determined based on the business’s current financial condition and stability as well as cash reserves and equity in other property or equipment. A rate change of even one or two points can be a large sum of money over the course of your loan.
Understanding the Fees
There are many fees that you might need to prepay on commercial loans. This can include a loan origination fee or a processing fee, legal fees to cover the contract creating by the lender and also fees for surveys and appraisals of any property involved in the loan. The most important part of this is that these fees in no way guarantee that you will be getting a loan. So you need to be willing to pay the administrative fees even before you submit your documentation.
Be Prepared
The best way to insure that you are not wasting any money is to be prepared. You need to understand the fee structure and also the requirements to qualify for the loan. Once you know that you will qualify then you can move forward feeling secure about your financial position and your ability to get the commercial loan that you are requesting.

About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Understanding Commercial Mortgage Loans

Understanding the process involved in obtaining a commercial mortgage loan and the requirements to qualify for the loan are important for a business owner. It can make what once seemed like a very intimidating process less complicated.
When you are considering a commercial mortgage, you need to first decide if you want to get a nonrecourse loan or a recourse loan. The difference is that with a nonrecourse loan the lender can only take back the property in the event of a default but with a recourse loan the lender can require you to pay additional money if the property value is no longer enough to cover the loan balance. Getting a nonrecourse loan offers you, the borrower, additional security that in the event of a default on your loan, you will not be forced to pay additional money that you might not have. It protects your personal assets such as your home, retirement account and other investments that you might have.
Next you will want to consider which type of terms you would favor for your loan. A fixed rate mortgage is very popular because the rate is set and you do not need to worry about future budgetary surprises. Adjustable rate or variable rate mortgages sometimes offer a better interest rate but you are risking a rate increase which could be very unexpected. This can make it difficult to budget for the future and can cause you added financial stress when the interest rate increases.
The final type of mortgage term is called a balloon mortgage. This is more unique than the first two types in its repayment schedule. With this mortgage you only pay the interest each month but no principle. You can pay extra towards the principle but it is not required. But at the end of the loan term you are required to make a single payment, the balloon payment, for the remaining balance of the loan. This can leave you with a huge payment due at the end of your loan. Most borrowers are forced to refinance their mortgage balance when the term is completed to make the balloon payment. But the benefit is that you have enjoyed very low payments throughout the term of the loan.
Getting Your Loan
Finding a commercial mortgage loan can take some time but there are many lenders that you can work with. It is important to shop around for the best rates and terms to meet your current and future needs as a business. So invest the time to find the best lender for you.
Make a Great First Impression
When you are applying for the loan remember that the lender is judging your businesses ability to repay the loan as well as to be successful in your field of business. Taking the time to have your business and personal financial information prepared is critical. This will show the lender that you are very professional, that you are taking the loan process very seriously and that you are prepared both for the application process but also the process of repaying the loan. Making a great first impression will be very beneficial for a successful loan application process.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Comparing Commercial Mortgage Terms

Understanding the terms involved in a commercial mortgage is critical. These terms will help you to select the loan that best meets your current needs and your needs for the future.
Most business owners first and biggest concern when shopping for a commercial mortgage is the interest rate. This is one of the biggest factors in how much you are going to pay to borrow the money that you are requesting. As a borrower, you can look at the interest as the cost of getting a loan. And also understand that most businesses are never in a position to purchase a commercial property without getting a loan. It is the business equivalent of a home mortgage. It is also the way that the lender is going to make money from the deal.
Another important factor to consider is an adjustable rate versus a fixed rate commercial mortgage. A fixed interest rate is one that is set at the time of the loan creation and it remains constant for the entire term of the loan. This provides stability and makes it very easy to budget for future loan payments. A variable or adjustable rate is one that can fluctuate from month to month based on the prime rate and other factors in the economy and business world. In most cases the variable rate starts out lower than a fixed rate but the fluctuation can cause it to end up being much higher. Overall a variable rate is more of a gamble than a fixed rate and can be much more difficult to work into a long term budget.
Finding a term, or time frame, for the repayment of the loan is also very important. A shorter term means that the monthly payments will be larger than if you were to elect for a longer term. You will want to find a balance between the amount that you can afford to pay each month and how much interest you are willing to pay for a longer term.
Banks Make Money from Interest
Knowing that the bank is in business to make money, it makes sense that they are counting on you paying interest for a certain period of time, the term of the loan. If you choose to pay the loan off early then the bank is not getting paid as much interest and they are not making as much money. To offset that potential loss of interest and revenue, many lenders will insert an early payoff penalty clause into your loan. In some cases it is a percentage of the interest that you don’t pay due to the decrease in the term or in other cases it is a flat fee that you must pay. Knowing if there is such a clause will help you decide which loan offers the best terms to meet your needs.
Evaluate All of the Terms Carefully
When you are evaluating terms on a commercial mortgage, it is important to understand all of the fees as well as the repayment process. All of this information tells you how much you will truly be paying for the money that you are borrowing and also how long you will have to repay the money.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Thursday, September 21, 2017

Tips for Getting the best terms on your Commercial Mortgage

Before getting a Texas Commercial Mortgage know your credit score, have a large down payment on hand and have specific knowledge about the property you want to finance.
Knowing your credit score and taking steps to improve it is a vital to secure the best terms on your commercial mortgage. Ensure your score is as high as possible before beginning the application process. Once you know your credit score take concrete steps to improve it. Dispute errors and pay off outstanding debts. Your credit score will have a major impact on the terms of any mortgage you receive. Todd Huetner ,President of Huetner Capital claims “( A score) below 740, (and) it can start to cost you additional money for the same interest rate.” Fees could potentially range from a quarter of a percent to two percent of the total loan amount. If you cant raise your credit score to 740 you may have need to accept a higher interest rate on your mortgage. Another strategy is to seek out other investors in order to boost your credit profile.
You will likely have to make a substantial down payment on any commercial mortgage. Mortgage insurance doesn't cover investment properties. Therefore having a down payment, usually ranging from 20-25 percent of the properties total value is often necessary. A second mortgage is a possible way to raise the money needed for a down payment, but this is not an ideal strategy. You may need to get creative, cashing out old life insurance policies, using equity lines of credit or taking out private personal loans in order to secure the necessary down payment
Having a good credit profile and having a large down payment on hand
is vital to secure the best terms on any commercial mortgage.
But it is also vital that you know the property you want to finance.
The specific property, it’s location and it’s history will likely have an impact on the terms of your mortgage. Lenders prefer centrally located properties in urban or suburban areas. The lender will want to know if the property has existing tenants and what the terms of their leases are. The longer the term of these leases, the better your situation will be. Having long term tenants ensures consistent revenue and may help you negotiate better terms on any mortgage you apply for. Have knowledge about the historic occupancy rates of the property and a detailed understanding of the previous owners income. If you can establish that the property you want to finance is historically profitable, then your mortgage is considered less risky potentially and this could lead to lower interest rates
Factor in the need to make a large down payment and consider how this will affect you in the long run.
If the location doesn't have existing tenants it is important ask yourself if you can you pay the mortgage until you find businesses to occupy the space. In addition to having a substantial down payment lenders will often want potential borrowers to have six months of savings in reserve. To get the best terms on a traditional mortgage you will need an excellent score, have a large down payment and have substantial savings. Depending on your situation you may not meet these requirements and may want to consider other financing options. Nevertheless having an understanding of these facts, will likely help you leverage better terms on any Texas Commercial Mortgage you apply for.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Wednesday, July 6, 2016

Commercial Mortgage: Advice For Your First Loan

Is this your first time financing a commercial mortgage? If so, you don’t have to go at it alone.

An investment property can be a big step for you or your company. Thus, like any other big step you probably want to know just what you are getting into of course and why shouldn’t you? Signing up for a commercial mortgage for the first time is always the hardest. In other words, you’ve more than likely talked a good game about purchasing that strip mall, office park or hotel. But, you’ve probably never seen it through until now and that’s perfectly okay. Before, it was a future dream and bow you are ready to make it a reality so let’s help make that happen.

By now, you probably have your eye on a few good properties, but before you start shopping around for your commercial mortgage, there are definitely a few things you need to do. For starters, stop whatever you are doing this minute and check your credit—double check it, in fact. Your credit and your credit report don't matter. Chances are you have some issue you need to address or clear errors that you didn’t know where affecting your ability to be a strong borrower in the eyes of your future lender. Thus, this is the very first piece of advice you should take —check your credit and thoroughly review your credit report. If you do have a few outstanding issues that you want to take care of before applying for a commercial mortgage do that, but do not close out any old account, at least not before you obtain your loan. Knowing what your credit score will help you determine if you need an investor partner and it will also help you narrow down your loan options.

Other pre-applying tips that you take advantage of for your first commercial loan include having a down payment of at least 20 percent down or consider a second mortgage if the term down payment scares you and exploring your borrowing options i.e. there are more than banks that are interested in helping you finance your commercial property. Lastly, don’t be afraid to ask about owner financing—it may be just what you need.

The Difference between Wanting to Apply for a Loan and Applying

Clearly, looking at a few properties and checking your check and figuring out your down payment situation are all a part of the game, but there is a difference between wanting to finance an investment property and taking the next step—applying for financing. Thus, when you are ready to apply for your commercial loan make sure you truly understand the numbers, have the necessary documentation on-hand, have the necessary people on board ( accountant, investors, attorney and so on) and try your best to get pre-approved. In doing all these things your commercial property is that much closer to being yours.

Hello Investment Property!

Once you’ve obtained your mortgage for your investment property, it more than likely full-steam ahead. Ultimately, this is an exciting time and a true chance to learn as you go!

Dennis Dahlberg Broker/RI/CEO/MLO

Level 4 Funding LLC
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com
www.Level4Funding.com

111 Congress Ave |Austin | Texas | 78701

About the author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true.

Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

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Sunday, September 24, 2017

Three Factors to Consider When Evaluating Commercial Loans

Commercial loans are a great way to help to grow your business but there are a few facts that you need to be sure to understand. Knowing exactly what it will cost you to borrow money is an important factor in deciding if you are making a wise business decision.

Understanding the Fees

Be Prepared

Understanding Commercial Mortgage Loans

Understanding the process involved in obtaining a commercial mortgage loan and the requirements to qualify for the loan are important for a business owner. It can make what once seemed like a very intimidating process less complicated.

Getting Your Loan

Make a Great First Impression

Comparing Commercial Mortgage Terms

Understanding the terms involved in a commercial mortgage is critical. These terms will help you to select the loan that best meets your current needs and your needs for the future.

Banks Make Money from Interest

Evaluate All of the Terms Carefully

Thursday, September 21, 2017

Tips for Getting the best terms on your Commercial Mortgage

Before getting a Texas Commercial Mortgage know your credit score, have a large down payment on hand and have specific knowledge about the property you want to finance.

Having a good credit profile and having a large down payment on hand

is vital to secure the best terms on any commercial mortgage.

But it is also vital that you know the property you want to finance.

Factor in the need to make a large down payment and consider how this will affect you in the long run.

Wednesday, July 6, 2016

Commercial Mortgage: Advice For Your First Loan

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