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.
Without some familiarity pertaining to a Mortgage Refinance it could be difficult to understand where to start. Without some experience in financing, whether it's on an initial loan or a Residential Loan, these terms may seem like foreign language or somewhat silly for such a serious matter. A few examples would be: Arm, Balloon, Bridge Loans, Mezzanine Loans, Conduit or CMBS Loans etc.
If you think back to when you applied for your original Commercial Mortgage Finance, you will remember specific terminology slightly different than that of Loan 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, down payment, the lenders closing costs and so on, not too unlike a mortgage on a house.
Long before you ever dreamed of a Loan Refinance you had to make sure you can handle such responsibility with the original commercial loan by speaking to your Financial Advisor and your Accountant about how long your finances could carry the loan if things don't go as planned.
You had to make sure you can handle such an obligation by speaking to your Financial Advisor and your Accountant about how long your finances could carry the loan if things don't go as planned before ever thinking of moving onto Mortgage Refinance.
Do a simple break even analysis to compare costs of other lenders versus your existing bank. If they know you are looking for a Mortgage Refinance, your current bank may offer to reset the loan.
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 how closing costs will affect the equity you have been building over the years. Two of the biggest reasons people look at Loan 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 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.
Without some familiarity pertaining to a Mortgage Refinance it could be difficult to understand where to start. Without some experience in financing, whether it's on an initial loan or a Residential Loan, these terms may seem like foreign language or somewhat silly for such a serious matter. A few examples would be: Arm, Balloon, Bridge Loans, Mezzanine Loans, Conduit or CMBS Loans etc.
If you think back to when you applied for your original Commercial Mortgage Finance, you will remember specific terminology slightly different than that of Loan 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, down payment, the lenders closing costs and so on, not too unlike a mortgage on a house.
Long before you ever dreamed of a Loan Refinance you had to make sure you can handle such responsibility with the original commercial loan by speaking to your Financial Advisor and your Accountant about how long your finances could carry the loan if things don't go as planned.
You had to make sure you can handle such an obligation by speaking to your Financial Advisor and your Accountant about how long your finances could carry the loan if things don't go as planned before ever thinking of moving onto Mortgage Refinance.
Do a simple break even analysis to compare costs of other lenders versus your existing bank. If they know you are looking for a Mortgage Refinance, your current bank may offer to reset the loan.
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 how closing costs will affect the equity you have been building over the years. Two of the biggest reasons people look at Loan 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 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.
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.
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