Commercial Investment Loans

VK — Thu, 01 Apr 2010 19:30:57 +0000

When a borrower is seeking a commercial investment loan whether to purchase a commercial property or to refinance an existing property one must consider the loan points also known as loan origination fees charged by the lender as well as, discount points offered by the lender. Points charged are a significant income generator for the lender. Each point is worth 1% of the loan amount. Therefore, if a lender charges 2 points on a $200,000 loan the cost to the borrower is $4,000 or 2% of the loan amount. These points are generally paid up front at the time the borrower obtains the loan, normally by reducing the borrowers cash proceeds. For commercial loans the points are tax deductible over the life of the mortgage. For example, if the $200,000 loan has a ten year term, the borrower can deduct $400 per year from their taxes ($4000 divided by 10 years). If the borrower paids off the loan prior to the expiration of the ten years, the unused portion is deductible in the year of sale or refinancing of the mortgage. The borrower should keep in mind that the greater the risk to the lender the higher the points.

Another factor the borrower should consider are discounts points whether to pay or bypass. A discount point is a fee paid to the lender up-front to lower the interest rate on the loan. This may make sense to the borrower if the mortgage is going to be retained for a long period of time. To determine whether to pay for a reduced interest rate, the amount of money saved over a period of time from a reduced interest rate should be more than the cost of the discount fee paid.

Commercial Hard Money Loan

VK — Mon, 08 Mar 2010 19:58:43 +0000

Hard money loans are available to investors that are FICO challenged. If you have a Loan-To-Value (LTV) in your commercial property of 50-60% equity and low FICO scores you are a prime candidate for obtaining a hard money loan. These loans are generally one to three year terms and in some cases up to 20 years with interest rates in the neighborhood of 9-12% and 3-5 points.

Qualifying for a hard money loan is not as difficult as you may think. Co-signers are not always required to be on title, no seasoning of credit trade lines are necessarily required, cross-collaterlization is permitted, foreign nationals are okay and if you are unable to fully document your personal income is not a deal killer. However, if your investment is an owner occupied structure you must be able to show the ability to repay the loan.

Commercial Real Estate Loans » hard money loans

Commercial Investment Loans

Commercial Hard Money Loan