Commercial Mortgage Refinance – Will You Qualify?
Some questions if answered before the process gives a big relief. One such question is about commercial mortgage refinance. The one seeking it always remains in doubt whether he/she will qualify for refinancing or not? Here few things are mentioned which you can consider and get the answers about your qualification.
Regarding ownership, it should be determined that for how long the subject property is owned by you. Check whether it is less than 1 year because until the property is clear-and-free or sufficient equity is there, the appraised value won’t be used by the lender. He will use the purchased price and any improvements that are documentable and put by you.
History and Market
In history and market, determination of realistic estimated value of real estate and purchase price falls in. Also, the points about appraisal are considered, like when did appraisal completed last and its appraised value at that time. The usual mistake of overvaluing the property shouldn’t be made because in case of any mistakes, the borrower pays for it. The net operating income and current market cap rate according to the property area should be calculated. Finally, some basic calculations should be done to get an idea of income value.
Current Mortgage Terms
Here, your current mortgage terms should be identified. Is the reason behind refinancing lower interest rate or is it because of longer amortization? Some other questions you should ask yourself are:
- Is pulling out cash the reason behind refinancing?
- Is it because of any ballooning loan you have?
- What are your plans to sell?
- Are you having any prepayment penalty or lockout period which should be dealt with?
- Can your prepayment costs and lockout will be afforded by new loan?
Also determine your long-term goals. To get more precise analysis, consult any good refinance company like newcityfinancial.com.
Determine what kind of commercial property you are refinancing. There are different types of building which falls under different terms and affects the refinancing deal. Consider the percentage of space your business occupies because many lenders give money for owner-occupied deals.
You can also consider revising the lease terms and when you find that all the conditions are met from your end, apply for a commercial mortgage refinance.