Below are a few of the typical questions regarding Commercial Mortgage Refinances.
-How long does it take to close?
The time to close is universally under estimated by banks, lenders and brokers. Many firms advertise 30 days, which is simply not the norm. Despite borrower’s frustration and confusion on why it takes as long as it does to close, the reality is that it is odd for a commercial mortgage to close in less than 60 days. Oddly, one of the biggest delays actually is caused by the borrower’s inability and or reluctance to provide requested information. The borrower can have a huge impact on shortening the process by responding quickly to the lenders requests, even if they seem irrelevant or ridiculous.
-What are the fees?
On a commercial mortgage refinance the borrower can expect to pay a bank fee of 1%, lender processing fee of approximately $1000, an appraisal will cost $2,000 – $5,000, title ranges from $800 – $2000, environmental report will cost between $800 – $1,800. The larger and more complex the deal the higher the costs generally will be.
-What are my loan options?
The classic bank loan for owner occupant is a 5 year fixed, 20 year amortization program. In the wider market, options range from interest only, to 1 year adjustable, to 30 year fixed. Some lenders have created “stated income loans” where the borrower provides a limited amount of documentation.
-What are prepayment penalties?
Prepayment penalties are a way for lenders to preserve their return on funding loans, if the mortgage is prematurely paid off. From the borrowers perspective this is a negative feature that tacks on an additional fee, which is in the form of a percentage of the remaining balance. For example, 5% for 5 years, prepay is market. In means that if the borrower was to sells on refinance the loan within that 5 year period he would owe 5% of the existing loan balance.
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Tags: Commercial, Property
