Mortgage Refinance on a commercial property can be tricky, but it is possible to prepare yourself by becoming very familiar with how the process works, what to beware of and some of the terminology, this will help you understand what to expect at the same time increasing your knowledge.
Long before I became involved in Commercial Financing and Real Estate Development, I would hear terms mentioned in regards to Residential and Commercial Loans and Mortgage Refinance options, ARMS, Balloons etc. I had absolutely no experience in any real estate or how to acquire a mortgage loan, so these terms were like a foreign language to me. I realized very fast without thorough knowledge of the terminology it is hard to figure out what direction you will go.
If you think back to when you applied for your original Commercial Mortgage Finance, you will remember specific terminology some what different than that of 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 big loan, not to mention collateral, down payment, closing costs and so on, not too unlike a mortgage on a house.
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.
Before we move on to Loan Refinance terms 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.
It is very important to find a good Broker that offers a variety of innovative loan programs for your specific need. So now, it is time to look at Loan Refinance. Things may become very complicated on a loan for a commercial property.
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.
It is very important to look at may closing costs will affect the equity you have been building over the years. Two of the biggest reasons people look at Mortgage Refinance, are to get a better interest rate than they currently have, this means lower monthly mortgage payments (lower monthly payment means extra cash in your pocket) and the second reason people refinance their mortgage is to "cash out" some of the equity they may have built over time and invest it in a new project. Remember that knowledge is power, so stay knowledgeable by reading and researching your topic. - 16752
Long before I became involved in Commercial Financing and Real Estate Development, I would hear terms mentioned in regards to Residential and Commercial Loans and Mortgage Refinance options, ARMS, Balloons etc. I had absolutely no experience in any real estate or how to acquire a mortgage loan, so these terms were like a foreign language to me. I realized very fast without thorough knowledge of the terminology it is hard to figure out what direction you will go.
If you think back to when you applied for your original Commercial Mortgage Finance, you will remember specific terminology some what different than that of 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 big loan, not to mention collateral, down payment, closing costs and so on, not too unlike a mortgage on a house.
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.
Before we move on to Loan Refinance terms 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.
It is very important to find a good Broker that offers a variety of innovative loan programs for your specific need. So now, it is time to look at Loan Refinance. Things may become very complicated on a loan for a commercial property.
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.
It is very important to look at may closing costs will affect the equity you have been building over the years. Two of the biggest reasons people look at Mortgage Refinance, are to get a better interest rate than they currently have, this means lower monthly mortgage payments (lower monthly payment means extra cash in your pocket) and the second reason people refinance their mortgage is to "cash out" some of the equity they may have built over time and invest it in a new project. Remember that knowledge is power, so stay knowledgeable by reading and researching your topic. - 16752
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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.
