Everyone knows that loans of any kind are not simply just the principal and the interest. Texas Commercial Mortgages are no different, in this respect, as they come with a listing of fees.
This is one area where it truly does pay to read the fine print and be absolutely sure that you, as the borrower, have a water-tight seal on your understanding of your Texas Commercial Mortgage. This is, after all, going to affect your hard-earned profit.
There is no way around the fees that you might face as a borrower, however. You could have charges for legal fees, property assessments or even application fees. Sometimes these fees must be paid before you are even given an answer as to whether or not you have been granted your Texas Commercial Mortgage. This fee structure is actually one of the reasons that many find it difficult to apply for more than one mortgage offer, as the fees that must be paid ahead of a loan can sometimes run into many thousands of dollars.
With little exception, the fees associated with obtaining a mortgage are the sole responsibility of the borrower. The lender is allowing you to purchase property, so in their eyes, the borrow must front the cost of ensuring that everything surrounding the property and the loan. This usually also includes some sort of property appraisal so that both the lender and the borrower are able to amicably determine the true value of the property.
It is for this very reason, and the costs associated with the mortgage, that it is incredibly important for a borrower to know where they stand with their chances of acceptance with a lender before going through all of the cost and time that will be needed to complete this process. These fees are not something to take lightly. However, do not let this discourage you! If you are in a solid position to be accepted, then these fees are simply a cost of doing business. Be careful and thoughtful when it comes to understanding the fee structure of the application process and other associated fees.
What else do I need to understand to be able to accurately track my Texas Commercial Mortgage?
One final thing that you need to understand to truly figure out how your loan and interest rate work together with your Texas Commercial Mortgage is how “points” on an interest rate work. Essentially, one point is worth one percentage point off of your loan’s interest rate. This is something that is determined by the lender and goes rich into their pockets. For example, if your loan is 10% with 3 points, that means that you are effectively paying a 13% interest rate, with the extra 3% (the 3 points) being paid directly to the lender. While these points are negotiable before the loan is signed and delivered, once the mortgage is in effect there is nothing that the borrower can do to reduce this. The only option, if you feel as though your rate is too high, is to refinance for a lower rate or seek out an entirely new loan.
Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC Private Hard Money Lender
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
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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