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Commercial Mortgage
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Find the Best Mortgage Lender
If you are considering mortgage refinancing for any reason, comparison shopping for the best mortgage lender could save you thousands of dollars. Mortgage lenders vary widely with the fees and interest rates they charge. Doing your homework and researching mortgage lenders will help you avoid many costly mortgage refinancing mistakes. Here are three tips to help you evaluate mortgage lenders when ... Read mortgage refinance article
The mortgage debt
Kent Reliance Building Society is the first to make the never-ending mortgage facility available in the UK. First we had the flexible mortgage, which gave us the ability to overpay, underpay or take a payment break, now the never-ending mortgage has arrived. Also called the inter-generational mortgage and rather morbidly, the deathbed mortgage, it enables a parent to pass their home loan debt on ... Read mortgage refinance article
Commercial Mortgage
This article highlights the five primary reasons that banks decline commercial mortgage loan applications. The reasons provided below do not represent obscure issues, so it is likely that two or three of the reasons described will be important for typical commercial mortgage situations. The first two reasons (business plans and tax returns) will potentially impact all commercial borrowers. Many commercial loan officers will start their loan review process by stating some variation of "Can you show me your business plan?" and "We will need to see several years of tax returns".
Commercial projects are frequently too unique for traditional commercial banks. In these situations (even if a commercial borrower has favorable tax returns and an adequate business plan), it is not unusual for commercial borrowers to be declined for a commercial mortgage loan by a traditional commercial lender. Commercial borrowers are likely to be confused when they are turned down and will be unsure as to why it happened and what to do next. For each of the five major reasons that a bank might decline a commercial real estate loan, a practical strategy is provided for converting the declined loan into an approved commercial mortgage.
Reason # 1:
A bank's loan officer or loan underwriter is not satisfied that the business plan provided by the commercial borrower supports the requested loan.
Strategy # 1:
Most commercial borrowers will benefit directly from dealing with a commercial lender that does not require a business plan due to the following major benefits:
Reduce commercial mortgage costs by thousands of dollars. A common range for an average business plan (prepared to typical bank specifications) is $5,000 to $10,000.
Reduce mortgage closing time by several months. Business plans can be prepared before or after applying for a loan, but either way the net extra time required will probably be 1-2 months or more.
If the lender does not require a business plan, there is one less item standing between the commercial borrower and their approved loan.
Reason # 2:
Loan underwriters find something on a tax return that disqualifies a borrower under the bank's lending guidelines. This "something" will frequently be insufficient net income, but when loan underwriters look at tax returns, there are many other possibilities which produce a similar result.
Strategy # 2:
Business loan borrowers will never have Reason Number 2 to worry about if they are applying for a "Stated Income" commercial real estate loan. Very few traditional banks use Stated Income (no tax returns, no income verification, no IRS Form 4506) for a commercial mortgage. Commercial borrowers should seek out lenders using Stated Income Commercial Loans. However, this strategy will not work for all commercial mortgages since there is a maximum loan amount of $2-3 million for most Stated Income Commercial Mortgage Programs.
Reason # 3:
The bank does not generally make business loans for the type of business involved or imposes special requirements that make the loan impractical for the commercial borrower. Fewer banks are making loans to bar/restaurant properties. Similarly, auto service businesses are frequently given unnecessary (and expensive) environmental reporting requirements. There are many "special purpose" properties such as funeral homes, campgrounds and churches that most traditional banks will not include in their business lending portfolio.
Strategy # 3:
For most business borrowers that can get approved at a traditional bank, there are prudent options available elsewhere. And "prudent options" are clearly available only elsewhere when the bank won't make the business loan in the first place! There are very capable commercial lenders that are interested in special purpose properties.
Reason # 4:
When a business is refinancing their current commercial mortgage and wants to get a significant amount of cash out for various uses, it is not unusual for the bank to restrict what the funds are used for and to limit the amount of cash to amounts as small as $100,000. Even though the bank might make the loan, if they won't provide the amount of cash needed by the commercial borrower, this is equivalent to declining the loan.
Strategy # 4:
As mentioned in Strategy Number 3, there are other options available elsewhere! The commercial borrower's mission (and it is not impossible at all) is to use a commercial real estate lender that will allow them to get much larger amounts of unrestricted cash out of a commercial refinancing without restrictions on what they do with it.
Reason # 5:
The bank will not provide a business loan without adequate collateral, usually in the form of a lien on personal assets such as the commercial borrower's home.
Strategy # 5:
Commercial mortgage borrowers should seek out lenders that do not "cross collateralize" assets as a condition for obtaining a business loan. This will provide greater flexibility for the commercial borrower and avoid unnecessary (and unwise) connections between personal and business assets.
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Mortgage Calculator
A lot of people rent homes because they are unable to meet the requirements that mortgage lenders set.
The amount of rent they pay, however, is usually more than a mortgage on a similar property would cost. So, the problem isn't in the repayment but in the initial qualifying! Time to get on the net and check this out with a mortgage calculator!
If you are in this situation, it could be that when you moved into your home you did not qualify for the mortgage. Perhaps you were a student or unemployed, but your circumstances could be very different now. And it's time to move on.
Take a look at some properties like the one in which you live. Find out how much they cost. Use these figures in a rent vs. buy calculator to see what the difference between what you pay now and what you could expect to pay with a mortgages.
A mortgage calculator will give you the figures to input for the "buy" information part of the rent vs. buy calculator. Although it may at first seem very financially attractive to buy your own home, you also need to consider the "extras" that your landlord takes care of now - such as amenities, utilities and building maintenance.
Those costs are outside the scope of most mortgage calculators. They all become your responsibility once you have a mortgage. But, the mortgage calculator may set your mind at rest convincing you that a home with a mortgage is actually cost effective! You' are saving money!
Okay, so with the extra utility bills, perhaps extra commute bills, etc., it might not be much money, but it is YOUR house.
As you make regular payments, you will build collateral, or equity! Use a mortgage calculator to see the amazing effects of rolling that small surplus into the principal of your mortgage.
Knowing that your monthly payment goes toward paying for your home rather than the right to use your present living accommodation has to be a big incentive, right? Buying a home is more than paying for a place to stay; it's an investment towards your future. Some mortgage calculators have the ability to generate an amortization schedule.
The longer you keep your home, the more reward you see for your monthly payments. The amortization schedule breaks down exactly how much equity is accruing each month. Collect information about housing prices, interest rates and what you can afford. Then check it out through several online mortgage calculators and average the ones closest together.
A little work should show you what you might best be able to afford. You may decide that it is the right time to buy rather than rent.
If that home you chose, costs less than your rent had been (even given the additional expenses), you should consider making regular additional payments against your outstanding principal. A mortgage calculator will help to illustrate the amazing effects of making even small regular payments does to your mortgage!
Claim a free e-book that will show you how J.B.McConnaughey has used a system to control $4.1million worth of real estate for just $22 - and you can follow his system to do the same.
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