1. Why should I use a mortgage broker over a direct lender?
If you are knowledgeable about commercial loans or are willing to learn more about them and know exactly how to shop for the best commercial loan product for your specific needs you can obviously apply with a direct lender. Just click on the “Apply for a Commercial Loan” tab and you’ll be directed to the website specifically designed to help you with your Commercial Loan application needs. But if you prefer to allow a professional handle the complexities of this process and don’t need the headaches associated with this process it is best that you hire a mortgage broker to help you with it. I am here to make your life a little easier!
2. What are your rates?
Rates depend on the type of financing, the type of property and your credit rating. Long-term fixed rate loan rates are generally higher than adjustable loan rates. Once the lender reviews your loan package I should be able to provide you with the best rate and terms. Even then, rates are subject to change until you receive a lock, due to today’s market volatility.
3. How long does it take to close?
That depends on how quickly I can receive your information. Most “delays” are actually caused by the absence of important documentation for the borrower.
If everything goes smoothly, usually within 45-60 days. Some hard money loans can potentially close within 30 days.
4. What does it cost to apply for a loan?
Your pre-approval (LOI – Letter of Intent) is free. If you decide to move forward, you will be required to deposit funds for third-party reports (e.g., appraisal, property inspections, legal, etc.).
5. What is the difference between a recourse loan and a non recourse loan?
A recourse loan means the loan is guaranteed by the borrower personally. A non-recourse loan means a third-party organization is formed for the property, such as an LLC or corporation. If the loan defaults for any reason, the mortgage holder would then take control of the LLC or corporation..
6. What is Net Operating Income (NOI)?
NOI is gross rent or income less expenses on the property.
7. What is ADS (Annual Debt Service)?
Annual Debt Service is the monthly principal and interest times 12 months (not including taxes and insurance in the ADS).
8. What is a CAP Rate?
CAP rate is a measurement of the rate of return on an investment. You calculate this by taking the NOI and dividing it by purchase price. The NOI divided by the CAP Rate = Value
9. Can I order an Appraisal or use an existing appraisal?
Unfortunately, lenders nationwide do not allow the use of existing appraisals. Therefore a new appraisal will be ordered upon a fully executed acceptance of Conditional Loan Approval from you.
10. Can I take title in the name of corporation or other non-person entity?
Yes, as long as such entity is legal.