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Commercial Financing for Apartments (You should note that this site is to make your Real Estate transactions more enjoyable, the information below is being offered by a lender who I have no personal contact with, but seems to have the most knowledge I have found for 5 unit apartments and up. The main reason this is offered in our general site is that I find over half the people I speak to that want to buy apartments do not have any knowledge that if they buy more than 4 units they need a "commercial loan". However, what is worse is that many of the agents I have spoken to over the years that call me regarding multi housing do not know either and when I found myself selling my own 6 unit, I called many lending institutions looking for a lender and finally found a referral for the gentleman listed below. So I hope this helps, you really should use someone educated in what you are doing.) There are two main programs for apartment loans (5+ units). The dividing line is whether or not the loan amount is above or below $250,000.
The following list applies to either loan program: No deferred maintenance at the time of closing the loan, or in some cases a 150% escrow holdback is required until repairs are completed All borrowers should have a middle credit (FICO) score of 680+ to qualify for the best rates. However, FICOs as low as 580 can still obtain financing under this program. Debt service ratio must be 1.2 or better (annual net income divided by annual mortgage payments > 1.2) Full seller financial documentation must be provided for the past 2 calendar years and YTD financials, plus a current rent roll and copies of all leases Complete buyer/borrower disclosure of all income, assets and liabilities
Specifics for loans UNDER $250,000: Purchase or refinance requires 75% LTV (25% down payment). May go to 80% with perfect credit, income and assets on a purchase. Seller carry backs not to exceed 10%, note term must be 5 years or greater, payment is calculated in debt service ratio Current rates start around 5.75% on a fully amortized 30-year loan on a 6-month LIBOR ARM. Rates can be fixed for the 1st 3 or 5 years at higher interest rates. Loan costs include 2% origination, $3,000 other lender costs, appraisal and title fees (typically $10,000 - $12,000 total for all costs and fees)
Specifics for loans OVER $250,000: Purchase or refinance requires 75% LTV (25% down payment). Seller carry backs not to exceed 10%, note term must be 5 years or greater, payment is calculated in debt service ratio Current rates are around 5.25% on a fully amortized 30-year loan on a 6-month LIBOR ARM. Rates can be fixed for the 1st 3 or 5 years at higher interest rates. Loan costs include 1% origination, $3,000 other lender costs, appraisal and title fees
Contact Information: John Schroeder, Mortgage Broker 602-373-4638 cell 480-998-8450 voice 800-535-1800 toll free 480-998-8495 fax 6324 E. Aster Drive Scottsdale, AZ 85254 (office address) Back to Acres Realty web contents page
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