There is no Absolute in Mortgage Refinance
Below I have mentioned some terms to become familiar with to help increase your knowledge and help you become prepared and learn what to expect as you approach a Loan Refinance for a commercial property.
Two of the main reasons people look at Mortgage Refinance, is to help reduce monthly payments and interest, in my opinion one of the most important items to look at is how closing costs will affect the equity you have built over the years.
Long before I became involved in Real Estate, I would hear terms mentioned in regards to Residential and Commercial Loans and Mortgage Refinance options, ARMS, Balloons etc. I was just getting started in this industry and had absolutely no experience in any real estate or financing, so these terms were like a foreign language. I realized very quickly that without thorough knowledge of the terminology it is hard to understand what direction you will go.
If you think back to when you applied for your original Commercial Mortgage Finance, you will remember thinking with a slightly different approach than you would with Mortgage Refinance. You had to think about the price of the commercial property, the time it will take to secure a loan this size, it is possible for the amount of time specified on the contract to run out before you get funded, protection from default on such a large loan, not to mention collateral, closing costs and so on. Things can become very complicated on a loan this size for a commercial property.
It is very important to look at how closing costs will affect the equity you have been building over the years. Your situation is a little different and you will need to approach the Mortgage Refinance accordingly. You will now start looking at possible Prepayment Penalties, Cash Out Proceeds, and maybe you want to Inject the money you cash out into another property or update your current property, what is the Discounted Cash Flow, Current vs. Proposed Loan to Value Ratio.
Let's recap what terms you had to learn before, such as 1031 Tax Exchange, Environmental Reports, what type of commercial property qualifies for what type of loan, which is a lot for one to learn, the difference between Conduit and Mezzanine Loans, and so on. Most importantly, you had to find a great Broker that offers a variety of innovative loan programs for your specific need. So now, it is time to look at Mortgage Refinance.
The cost to complete a Mortgage Refinance for a commercial property can turn out to be quite high if you were under the impression it would be less than an original loan. An appraisal can run between $2,000 - $5,000, Title between $800 - $2,000, Phase One Environmental Report around $2,000 and lender processing fees around $1,000.
Remember, knowledge is power, stay informed by reading and researching your topic. Be very clear about your reasons for Mortgage Refinance so you won't make mistakes that could cost you more in the long run.
Two of the main reasons people look at Mortgage Refinance, is to help reduce monthly payments and interest, in my opinion one of the most important items to look at is how closing costs will affect the equity you have built over the years.
Long before I became involved in Real Estate, I would hear terms mentioned in regards to Residential and Commercial Loans and Mortgage Refinance options, ARMS, Balloons etc. I was just getting started in this industry and had absolutely no experience in any real estate or financing, so these terms were like a foreign language. I realized very quickly that without thorough knowledge of the terminology it is hard to understand what direction you will go.
If you think back to when you applied for your original Commercial Mortgage Finance, you will remember thinking with a slightly different approach than you would with Mortgage Refinance. You had to think about the price of the commercial property, the time it will take to secure a loan this size, it is possible for the amount of time specified on the contract to run out before you get funded, protection from default on such a large loan, not to mention collateral, closing costs and so on. Things can become very complicated on a loan this size for a commercial property.
It is very important to look at how closing costs will affect the equity you have been building over the years. Your situation is a little different and you will need to approach the Mortgage Refinance accordingly. You will now start looking at possible Prepayment Penalties, Cash Out Proceeds, and maybe you want to Inject the money you cash out into another property or update your current property, what is the Discounted Cash Flow, Current vs. Proposed Loan to Value Ratio.
Let's recap what terms you had to learn before, such as 1031 Tax Exchange, Environmental Reports, what type of commercial property qualifies for what type of loan, which is a lot for one to learn, the difference between Conduit and Mezzanine Loans, and so on. Most importantly, you had to find a great Broker that offers a variety of innovative loan programs for your specific need. So now, it is time to look at Mortgage Refinance.
The cost to complete a Mortgage Refinance for a commercial property can turn out to be quite high if you were under the impression it would be less than an original loan. An appraisal can run between $2,000 - $5,000, Title between $800 - $2,000, Phase One Environmental Report around $2,000 and lender processing fees around $1,000.
Remember, knowledge is power, stay informed by reading and researching your topic. Be very clear about your reasons for Mortgage Refinance so you won't make mistakes that could cost you more in the long run.
About the Author:
This article is brought to you by the experts at EFD Commercial Investments Inc. For more free information about loan refinance, visit their Mortgage Refinance page.
posted by Debt Consolidation Loan at
9:08 AM
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