What to Expect when Applying for a Commercial Mortgage Loan: Part 1 #home #mortgage #refinancing


#commercial mortgage

#

What to Expect when Applying for a Commercial Mortgage Loan:
Banks and Private Alternatives
Part 1

If you have never borrowed money for your business before, you may be in for a surprise. Whether you want to borrow working capital to expand your business or leverage equity in a commercial real estate venture, you will soon find out the commercial loan process is very different from the more common home mortgage process. Commercial loans, unlike the vast majority of residential mortgages, are not ultimately backed by a governmental entity such as Fannie Mae. Consequently, most commercial lenders are risk-averse; they charge higher interests rate than on a comparable home loan. Some lenders go a step further, scrutinizing the borrower’s business as well as the commercial property that will serve as collateral for the loan. This means that the business borrower should have different expectations when applying for a loan against his commercial property than he would have for a loan secured by his or her primary residence.

Following is a list of questions the borrower should ask himself and the lender before applying for a commercial loan.

1. How am I going to meet the loan repayment terms?

Typically, bank loans require the borrower to repay his or her entire business loan much earlier than its stated due date. Banks do this by requiring most of their loans to include a balloon repayment. This means the borrower will pay interest and principal on his 30-year mortgage at the stated interest rate for the first few years (generally 3, 5 or 10 years) and then repay the entire balance in one balloon payment.

Many borrowers do not save enough in such a short time frame, so they must either re-qualify for their loan or refinance the loan at the end of the balloon term. If the business happens to have any cash-flow problems in the years immediately preceding the balloon term, the lender may require a higher interest rate, or the borrower may not qualify for a loan at all. If this happens, the borrower runs the risk of being turned down for financing altogether and the property may be in jeopardy of foreclosure.

A balloon loan has other risks as well. If the borrower’s business is in a “risky” industry at the time the balloon is due (think of the oil and gas bust in the 1980s or the telecom implosion of the 2000s), the lender may back out of all refinancing for the enterprise. Alternatively, a lender simply may decide its loan portfolio has too many loans in a given industry, so he will deny future refinancing within that trade.

Non-bank lenders generally offer less stringent credit requirements for commercial loans. Some non-bank lenders will make long-term commercial loans without requiring the early balloon repayment. These loans, which may carry a slightly higher interest rate, work like a typical home loan. They allow a steady repayment over twenty or thirty years. It is often worth paying a one- or two-point higher interest rate for a fixed-term loan in order to ensure the security of a long-term loan commitment.

2. How much can or should I borrow?

Most bank loans prohibit second mortgages, so the borrower should go into the loan process intending to borrow enough to meet current business needs, or enough to sufficiently leverage real estate investments. For a traditional acquisition loan in which the borrower is buying a new property, banks usually require a down payment of 20-25%. So for a $600,000 acquisition, the borrower will need to come up with $120,000-$150,000 for the down payment.

Some non-traditional loans will allow the borrower to make a smaller down payment, maximizing the loan-to-value (LTV) at 85-90%. Such loans are generally not bank loans, but are offered by direct commercial lenders or pools of commercial investors. If the customer wants to borrow the maximum amount possible, the interest rate on such loans may be a point or two higher than typical bank loans. Before deciding how much to borrow, potential borrowers should:

  • Evaluate how much cash they are likely to need
  • Analyze their ability to repay the loan as it is structured

Research has consistently shown that the number one reason behind the failures of most small businesses is the lack of adequate capital to meet cash-flow needs. Because of this it may actually be safer for a small business to leave a larger cushion against unforeseen events by borrowing more money at the slightly higher rate.

The amount of the loan requested has an effect on which commercial lenders will fund the loan. Small businesses borrowing less than $2,000,000 will visit a different pool of potential lenders than those seeking loans of over $5 million. Small business loans are generally made by direct commercial lenders (easily located by internet searches) or by small local banks. Larger loans are generally made by regional banks, and very large loans are made by mega-banks or Wall Street lenders.


What to Expect when Applying for a Commercial Mortgage Loan: Part 1 #refinance #mortgage #calculator


#commercial mortgage

#

What to Expect when Applying for a Commercial Mortgage Loan:
Banks and Private Alternatives
Part 1

If you have never borrowed money for your business before, you may be in for a surprise. Whether you want to borrow working capital to expand your business or leverage equity in a commercial real estate venture, you will soon find out the commercial loan process is very different from the more common home mortgage process. Commercial loans, unlike the vast majority of residential mortgages, are not ultimately backed by a governmental entity such as Fannie Mae. Consequently, most commercial lenders are risk-averse; they charge higher interests rate than on a comparable home loan. Some lenders go a step further, scrutinizing the borrower’s business as well as the commercial property that will serve as collateral for the loan. This means that the business borrower should have different expectations when applying for a loan against his commercial property than he would have for a loan secured by his or her primary residence.

Following is a list of questions the borrower should ask himself and the lender before applying for a commercial loan.

1. How am I going to meet the loan repayment terms?

Typically, bank loans require the borrower to repay his or her entire business loan much earlier than its stated due date. Banks do this by requiring most of their loans to include a balloon repayment. This means the borrower will pay interest and principal on his 30-year mortgage at the stated interest rate for the first few years (generally 3, 5 or 10 years) and then repay the entire balance in one balloon payment.

Many borrowers do not save enough in such a short time frame, so they must either re-qualify for their loan or refinance the loan at the end of the balloon term. If the business happens to have any cash-flow problems in the years immediately preceding the balloon term, the lender may require a higher interest rate, or the borrower may not qualify for a loan at all. If this happens, the borrower runs the risk of being turned down for financing altogether and the property may be in jeopardy of foreclosure.

A balloon loan has other risks as well. If the borrower’s business is in a “risky” industry at the time the balloon is due (think of the oil and gas bust in the 1980s or the telecom implosion of the 2000s), the lender may back out of all refinancing for the enterprise. Alternatively, a lender simply may decide its loan portfolio has too many loans in a given industry, so he will deny future refinancing within that trade.

Non-bank lenders generally offer less stringent credit requirements for commercial loans. Some non-bank lenders will make long-term commercial loans without requiring the early balloon repayment. These loans, which may carry a slightly higher interest rate, work like a typical home loan. They allow a steady repayment over twenty or thirty years. It is often worth paying a one- or two-point higher interest rate for a fixed-term loan in order to ensure the security of a long-term loan commitment.

2. How much can or should I borrow?

Most bank loans prohibit second mortgages, so the borrower should go into the loan process intending to borrow enough to meet current business needs, or enough to sufficiently leverage real estate investments. For a traditional acquisition loan in which the borrower is buying a new property, banks usually require a down payment of 20-25%. So for a $600,000 acquisition, the borrower will need to come up with $120,000-$150,000 for the down payment.

Some non-traditional loans will allow the borrower to make a smaller down payment, maximizing the loan-to-value (LTV) at 85-90%. Such loans are generally not bank loans, but are offered by direct commercial lenders or pools of commercial investors. If the customer wants to borrow the maximum amount possible, the interest rate on such loans may be a point or two higher than typical bank loans. Before deciding how much to borrow, potential borrowers should:

  • Evaluate how much cash they are likely to need
  • Analyze their ability to repay the loan as it is structured

Research has consistently shown that the number one reason behind the failures of most small businesses is the lack of adequate capital to meet cash-flow needs. Because of this it may actually be safer for a small business to leave a larger cushion against unforeseen events by borrowing more money at the slightly higher rate.

The amount of the loan requested has an effect on which commercial lenders will fund the loan. Small businesses borrowing less than $2,000,000 will visit a different pool of potential lenders than those seeking loans of over $5 million. Small business loans are generally made by direct commercial lenders (easily located by internet searches) or by small local banks. Larger loans are generally made by regional banks, and very large loans are made by mega-banks or Wall Street lenders.


What to Expect when Applying for a Commercial Mortgage Loan: Part 1 #federal #home #loan


#commercial mortgage

#

What to Expect when Applying for a Commercial Mortgage Loan:
Banks and Private Alternatives
Part 1

If you have never borrowed money for your business before, you may be in for a surprise. Whether you want to borrow working capital to expand your business or leverage equity in a commercial real estate venture, you will soon find out the commercial loan process is very different from the more common home mortgage process. Commercial loans, unlike the vast majority of residential mortgages, are not ultimately backed by a governmental entity such as Fannie Mae. Consequently, most commercial lenders are risk-averse; they charge higher interests rate than on a comparable home loan. Some lenders go a step further, scrutinizing the borrower’s business as well as the commercial property that will serve as collateral for the loan. This means that the business borrower should have different expectations when applying for a loan against his commercial property than he would have for a loan secured by his or her primary residence.

Following is a list of questions the borrower should ask himself and the lender before applying for a commercial loan.

1. How am I going to meet the loan repayment terms?

Typically, bank loans require the borrower to repay his or her entire business loan much earlier than its stated due date. Banks do this by requiring most of their loans to include a balloon repayment. This means the borrower will pay interest and principal on his 30-year mortgage at the stated interest rate for the first few years (generally 3, 5 or 10 years) and then repay the entire balance in one balloon payment.

Many borrowers do not save enough in such a short time frame, so they must either re-qualify for their loan or refinance the loan at the end of the balloon term. If the business happens to have any cash-flow problems in the years immediately preceding the balloon term, the lender may require a higher interest rate, or the borrower may not qualify for a loan at all. If this happens, the borrower runs the risk of being turned down for financing altogether and the property may be in jeopardy of foreclosure.

A balloon loan has other risks as well. If the borrower’s business is in a “risky” industry at the time the balloon is due (think of the oil and gas bust in the 1980s or the telecom implosion of the 2000s), the lender may back out of all refinancing for the enterprise. Alternatively, a lender simply may decide its loan portfolio has too many loans in a given industry, so he will deny future refinancing within that trade.

Non-bank lenders generally offer less stringent credit requirements for commercial loans. Some non-bank lenders will make long-term commercial loans without requiring the early balloon repayment. These loans, which may carry a slightly higher interest rate, work like a typical home loan. They allow a steady repayment over twenty or thirty years. It is often worth paying a one- or two-point higher interest rate for a fixed-term loan in order to ensure the security of a long-term loan commitment.

2. How much can or should I borrow?

Most bank loans prohibit second mortgages, so the borrower should go into the loan process intending to borrow enough to meet current business needs, or enough to sufficiently leverage real estate investments. For a traditional acquisition loan in which the borrower is buying a new property, banks usually require a down payment of 20-25%. So for a $600,000 acquisition, the borrower will need to come up with $120,000-$150,000 for the down payment.

Some non-traditional loans will allow the borrower to make a smaller down payment, maximizing the loan-to-value (LTV) at 85-90%. Such loans are generally not bank loans, but are offered by direct commercial lenders or pools of commercial investors. If the customer wants to borrow the maximum amount possible, the interest rate on such loans may be a point or two higher than typical bank loans. Before deciding how much to borrow, potential borrowers should:

  • Evaluate how much cash they are likely to need
  • Analyze their ability to repay the loan as it is structured

Research has consistently shown that the number one reason behind the failures of most small businesses is the lack of adequate capital to meet cash-flow needs. Because of this it may actually be safer for a small business to leave a larger cushion against unforeseen events by borrowing more money at the slightly higher rate.

The amount of the loan requested has an effect on which commercial lenders will fund the loan. Small businesses borrowing less than $2,000,000 will visit a different pool of potential lenders than those seeking loans of over $5 million. Small business loans are generally made by direct commercial lenders (easily located by internet searches) or by small local banks. Larger loans are generally made by regional banks, and very large loans are made by mega-banks or Wall Street lenders.


What to Expect when Applying for a Commercial Mortgage Loan: Part 1 #mortgage #refi #rates


#commercial mortgage

#

What to Expect when Applying for a Commercial Mortgage Loan:
Banks and Private Alternatives
Part 1

If you have never borrowed money for your business before, you may be in for a surprise. Whether you want to borrow working capital to expand your business or leverage equity in a commercial real estate venture, you will soon find out the commercial loan process is very different from the more common home mortgage process. Commercial loans, unlike the vast majority of residential mortgages, are not ultimately backed by a governmental entity such as Fannie Mae. Consequently, most commercial lenders are risk-averse; they charge higher interests rate than on a comparable home loan. Some lenders go a step further, scrutinizing the borrower’s business as well as the commercial property that will serve as collateral for the loan. This means that the business borrower should have different expectations when applying for a loan against his commercial property than he would have for a loan secured by his or her primary residence.

Following is a list of questions the borrower should ask himself and the lender before applying for a commercial loan.

1. How am I going to meet the loan repayment terms?

Typically, bank loans require the borrower to repay his or her entire business loan much earlier than its stated due date. Banks do this by requiring most of their loans to include a balloon repayment. This means the borrower will pay interest and principal on his 30-year mortgage at the stated interest rate for the first few years (generally 3, 5 or 10 years) and then repay the entire balance in one balloon payment.

Many borrowers do not save enough in such a short time frame, so they must either re-qualify for their loan or refinance the loan at the end of the balloon term. If the business happens to have any cash-flow problems in the years immediately preceding the balloon term, the lender may require a higher interest rate, or the borrower may not qualify for a loan at all. If this happens, the borrower runs the risk of being turned down for financing altogether and the property may be in jeopardy of foreclosure.

A balloon loan has other risks as well. If the borrower’s business is in a “risky” industry at the time the balloon is due (think of the oil and gas bust in the 1980s or the telecom implosion of the 2000s), the lender may back out of all refinancing for the enterprise. Alternatively, a lender simply may decide its loan portfolio has too many loans in a given industry, so he will deny future refinancing within that trade.

Non-bank lenders generally offer less stringent credit requirements for commercial loans. Some non-bank lenders will make long-term commercial loans without requiring the early balloon repayment. These loans, which may carry a slightly higher interest rate, work like a typical home loan. They allow a steady repayment over twenty or thirty years. It is often worth paying a one- or two-point higher interest rate for a fixed-term loan in order to ensure the security of a long-term loan commitment.

2. How much can or should I borrow?

Most bank loans prohibit second mortgages, so the borrower should go into the loan process intending to borrow enough to meet current business needs, or enough to sufficiently leverage real estate investments. For a traditional acquisition loan in which the borrower is buying a new property, banks usually require a down payment of 20-25%. So for a $600,000 acquisition, the borrower will need to come up with $120,000-$150,000 for the down payment.

Some non-traditional loans will allow the borrower to make a smaller down payment, maximizing the loan-to-value (LTV) at 85-90%. Such loans are generally not bank loans, but are offered by direct commercial lenders or pools of commercial investors. If the customer wants to borrow the maximum amount possible, the interest rate on such loans may be a point or two higher than typical bank loans. Before deciding how much to borrow, potential borrowers should:

  • Evaluate how much cash they are likely to need
  • Analyze their ability to repay the loan as it is structured

Research has consistently shown that the number one reason behind the failures of most small businesses is the lack of adequate capital to meet cash-flow needs. Because of this it may actually be safer for a small business to leave a larger cushion against unforeseen events by borrowing more money at the slightly higher rate.

The amount of the loan requested has an effect on which commercial lenders will fund the loan. Small businesses borrowing less than $2,000,000 will visit a different pool of potential lenders than those seeking loans of over $5 million. Small business loans are generally made by direct commercial lenders (easily located by internet searches) or by small local banks. Larger loans are generally made by regional banks, and very large loans are made by mega-banks or Wall Street lenders.


What to Expect when Applying for a Commercial Mortgage Loan: Part 1 #mortgage #calculator #refinance


#commercial mortgage

#

What to Expect when Applying for a Commercial Mortgage Loan:
Banks and Private Alternatives
Part 1

If you have never borrowed money for your business before, you may be in for a surprise. Whether you want to borrow working capital to expand your business or leverage equity in a commercial real estate venture, you will soon find out the commercial loan process is very different from the more common home mortgage process. Commercial loans, unlike the vast majority of residential mortgages, are not ultimately backed by a governmental entity such as Fannie Mae. Consequently, most commercial lenders are risk-averse; they charge higher interests rate than on a comparable home loan. Some lenders go a step further, scrutinizing the borrower’s business as well as the commercial property that will serve as collateral for the loan. This means that the business borrower should have different expectations when applying for a loan against his commercial property than he would have for a loan secured by his or her primary residence.

Following is a list of questions the borrower should ask himself and the lender before applying for a commercial loan.

1. How am I going to meet the loan repayment terms?

Typically, bank loans require the borrower to repay his or her entire business loan much earlier than its stated due date. Banks do this by requiring most of their loans to include a balloon repayment. This means the borrower will pay interest and principal on his 30-year mortgage at the stated interest rate for the first few years (generally 3, 5 or 10 years) and then repay the entire balance in one balloon payment.

Many borrowers do not save enough in such a short time frame, so they must either re-qualify for their loan or refinance the loan at the end of the balloon term. If the business happens to have any cash-flow problems in the years immediately preceding the balloon term, the lender may require a higher interest rate, or the borrower may not qualify for a loan at all. If this happens, the borrower runs the risk of being turned down for financing altogether and the property may be in jeopardy of foreclosure.

A balloon loan has other risks as well. If the borrower’s business is in a “risky” industry at the time the balloon is due (think of the oil and gas bust in the 1980s or the telecom implosion of the 2000s), the lender may back out of all refinancing for the enterprise. Alternatively, a lender simply may decide its loan portfolio has too many loans in a given industry, so he will deny future refinancing within that trade.

Non-bank lenders generally offer less stringent credit requirements for commercial loans. Some non-bank lenders will make long-term commercial loans without requiring the early balloon repayment. These loans, which may carry a slightly higher interest rate, work like a typical home loan. They allow a steady repayment over twenty or thirty years. It is often worth paying a one- or two-point higher interest rate for a fixed-term loan in order to ensure the security of a long-term loan commitment.

2. How much can or should I borrow?

Most bank loans prohibit second mortgages, so the borrower should go into the loan process intending to borrow enough to meet current business needs, or enough to sufficiently leverage real estate investments. For a traditional acquisition loan in which the borrower is buying a new property, banks usually require a down payment of 20-25%. So for a $600,000 acquisition, the borrower will need to come up with $120,000-$150,000 for the down payment.

Some non-traditional loans will allow the borrower to make a smaller down payment, maximizing the loan-to-value (LTV) at 85-90%. Such loans are generally not bank loans, but are offered by direct commercial lenders or pools of commercial investors. If the customer wants to borrow the maximum amount possible, the interest rate on such loans may be a point or two higher than typical bank loans. Before deciding how much to borrow, potential borrowers should:

  • Evaluate how much cash they are likely to need
  • Analyze their ability to repay the loan as it is structured

Research has consistently shown that the number one reason behind the failures of most small businesses is the lack of adequate capital to meet cash-flow needs. Because of this it may actually be safer for a small business to leave a larger cushion against unforeseen events by borrowing more money at the slightly higher rate.

The amount of the loan requested has an effect on which commercial lenders will fund the loan. Small businesses borrowing less than $2,000,000 will visit a different pool of potential lenders than those seeking loans of over $5 million. Small business loans are generally made by direct commercial lenders (easily located by internet searches) or by small local banks. Larger loans are generally made by regional banks, and very large loans are made by mega-banks or Wall Street lenders.


What to Expect when Applying for a Commercial Mortgage Loan: Part 1 #mortgage #comparison


#commercial mortgage

#

What to Expect when Applying for a Commercial Mortgage Loan:
Banks and Private Alternatives
Part 1

If you have never borrowed money for your business before, you may be in for a surprise. Whether you want to borrow working capital to expand your business or leverage equity in a commercial real estate venture, you will soon find out the commercial loan process is very different from the more common home mortgage process. Commercial loans, unlike the vast majority of residential mortgages, are not ultimately backed by a governmental entity such as Fannie Mae. Consequently, most commercial lenders are risk-averse; they charge higher interests rate than on a comparable home loan. Some lenders go a step further, scrutinizing the borrower’s business as well as the commercial property that will serve as collateral for the loan. This means that the business borrower should have different expectations when applying for a loan against his commercial property than he would have for a loan secured by his or her primary residence.

Following is a list of questions the borrower should ask himself and the lender before applying for a commercial loan.

1. How am I going to meet the loan repayment terms?

Typically, bank loans require the borrower to repay his or her entire business loan much earlier than its stated due date. Banks do this by requiring most of their loans to include a balloon repayment. This means the borrower will pay interest and principal on his 30-year mortgage at the stated interest rate for the first few years (generally 3, 5 or 10 years) and then repay the entire balance in one balloon payment.

Many borrowers do not save enough in such a short time frame, so they must either re-qualify for their loan or refinance the loan at the end of the balloon term. If the business happens to have any cash-flow problems in the years immediately preceding the balloon term, the lender may require a higher interest rate, or the borrower may not qualify for a loan at all. If this happens, the borrower runs the risk of being turned down for financing altogether and the property may be in jeopardy of foreclosure.

A balloon loan has other risks as well. If the borrower’s business is in a “risky” industry at the time the balloon is due (think of the oil and gas bust in the 1980s or the telecom implosion of the 2000s), the lender may back out of all refinancing for the enterprise. Alternatively, a lender simply may decide its loan portfolio has too many loans in a given industry, so he will deny future refinancing within that trade.

Non-bank lenders generally offer less stringent credit requirements for commercial loans. Some non-bank lenders will make long-term commercial loans without requiring the early balloon repayment. These loans, which may carry a slightly higher interest rate, work like a typical home loan. They allow a steady repayment over twenty or thirty years. It is often worth paying a one- or two-point higher interest rate for a fixed-term loan in order to ensure the security of a long-term loan commitment.

2. How much can or should I borrow?

Most bank loans prohibit second mortgages, so the borrower should go into the loan process intending to borrow enough to meet current business needs, or enough to sufficiently leverage real estate investments. For a traditional acquisition loan in which the borrower is buying a new property, banks usually require a down payment of 20-25%. So for a $600,000 acquisition, the borrower will need to come up with $120,000-$150,000 for the down payment.

Some non-traditional loans will allow the borrower to make a smaller down payment, maximizing the loan-to-value (LTV) at 85-90%. Such loans are generally not bank loans, but are offered by direct commercial lenders or pools of commercial investors. If the customer wants to borrow the maximum amount possible, the interest rate on such loans may be a point or two higher than typical bank loans. Before deciding how much to borrow, potential borrowers should:

  • Evaluate how much cash they are likely to need
  • Analyze their ability to repay the loan as it is structured

Research has consistently shown that the number one reason behind the failures of most small businesses is the lack of adequate capital to meet cash-flow needs. Because of this it may actually be safer for a small business to leave a larger cushion against unforeseen events by borrowing more money at the slightly higher rate.

The amount of the loan requested has an effect on which commercial lenders will fund the loan. Small businesses borrowing less than $2,000,000 will visit a different pool of potential lenders than those seeking loans of over $5 million. Small business loans are generally made by direct commercial lenders (easily located by internet searches) or by small local banks. Larger loans are generally made by regional banks, and very large loans are made by mega-banks or Wall Street lenders.


Mortgage Rates: What to Expect in 2016 #mortgage #modifications


#mortgage rate predictions

#

Mortgage Rates: What to Expect in 2016

  • What’s going to happen to mortgage rates in 2016? Sorry if you’ve seen it before, but this writer often recycles his favorite quote, which was said by the late Harvard economics professor John Kenneth Galbraith: “The only function of economic forecasting is to make astrology look respectable.” If there was ever any doubt about the truth of that, the spectacularly unanticipated credit crunch in 2007/08 should have allayed it. And, since then, economists, analysts and others have continued to push out forecasts that have proved signally wrong.

    Does this mean there’s no point in speculating about the future for those rates over the next year or so? No, of course not. Life is full of uncertainty, but smart people try to anticipate what’s coming. They may not get it right all the time, but the more they know, the better they can prepare.

    Crazy Home Loan Rates

    A quick look at Freddie Mac’s archive reveals it’s been more than five years since monthly average rates for 30-year fixed-rate mortgages (FRMs) topped 5 percent. At one point, at the end of 2012, they reached an all-time low of 3.35 percent. At the time of writing, they’re within spitting distance of that at well below 4 percent.

    How quickly the exceptional becomes the normal. And how easy it is to forget what “normal” is. In reality, if you look back over the decade before the crisis really hit in 2008, the average annual rate for that flavor of FRM was over 6 percent for seven of the 10 years. In 2000, it was 8.05 percent. Think that’s bad? In 1981, the annual average was more than twice that: 16.63 percent, with a high of 18.45 percent in October of that year. It was above 10 percent for the 11 years from 1979 through 1990.

    Of course, few, if any, economists expect mortgage rates to rise to those sorts of levels again anytime soon. And they were as exceptionally high as ours today are exceptionally low. But it’s important to recognize that the situation we’ve recently grown used to isn’t normal and it’s unlikely to be permanent.

    When Will “Normality” Return?

    Economists talk about the theory of the drunk on the bar stool. You walk into a strange bar, and there’s a clearly drunk guy swaying precariously on a bar stool. You think he’s bound to fall off any second. But he has another drink, and, although he looks even less likely to retain his perch, he somehow stays upright. This continues: more drinks accompanied by increasingly daring defiance of the laws of gravity. And then, maybe hours later, he finally tumbles with a sickening thud. The point is, you were absolutely right in your initial analysis: it really was inevitable he’d fall off his stool. But there were too many variables for you to calculate the timing correctly.

    That’s the excuse used by all the so-called experts (including this writer, though he’s rarely described in such flattering terms), who for years have been warning that mortgage rates looked set to rise imminently. Time and again that was true, but some variables intervened to keep rates low.

    What Experts Forecast for 2016

    Fannie Mae and the Mortgage Bankers Association (MBA) both have teams of economists dedicated to researching and forecasting trends in housing, including mortgage rates. Arguably, those economists are among the leading experts in this specialist field, although no doubt they’d be the first to acknowledge the-drunk-on-the-bar-stool syndrome. At the time of writing, their latest forecasts are dated September 2015, and disagree wildly.

    The MBA team expects average rates for 30-year FRMs to hit 4.2 percent in the last quarter of 2015, and to be up to 5.1 percent 12 months later. It anticipates fairly straight-line increases through 2016’s quarters: Q1 4.4 percent; Q2 4.7 percent; Q3 4.9 percent; Q4 5.1 percent.

    Fannie Mae forecasts much smaller and shallower rises, with only 3.9 percent in the last quarter of 2015, rising to 4.0 percent in 2016’s Q1, 4.1 percent in Q2 and 4.2 percent in both Q3 and Q4.

    Who’s Right?

    Neither team is stupid, and the fact is either could be right (or both could be wrong). Even the Federal Reserve is currently unable to confidently predict when its own rates will rise, and it sets those itself.

    That’s because interest rates are affected by a wide range of domestic and global economic data and influences, and those can turn on a dime. Right now, some influential voices are predicting a global recession and possibly global deflation. That might see Fannie Mae’s forecast of slow increases in rates proved right, or possibly result in stagnant or even lower mortgage rates. Alternatively, the economic storm clouds might blow away as quickly as they gathered, and it could be the MBA team looking forward to bonus season.

    Most experts currently expect to see some rises between now and the end of 2016. However, a few reckon it could be a long time before we get back to normal levels. One, Deutsche Bank equity strategist David Bianco, wrote in early October, “We see a better chance of landing men on Mars before a full normalization of nominal and real interest rates, especially 10-year yields, to historical norms.”

    What to Look Out For

    Usually, good economic data see rates rise while poor numbers pull them down. In particular, low unemployment and inflation at around 2 percent are important, because those are the main criteria the Fed looks at when setting its rates. But good numbers concerning gross domestic product (GDP), incomes, manufacturing, consumer confidence and spending, and so on are all likely to see rates rise sooner and faster. Poor ones generally have the opposite effect, as does bad news about foreign economies.

    What’s going to happen to mortgage rates in 2016? The short answer is nobody can be sure. If you’re reading this because you need to make an important decision (time the purchase of a home, perhaps, or decide when to refinance an adjustable-rate mortgage (ARM)) that’s deeply unhelpful, or take cash out. But at least you now know the signs to look out for. And you can track all the data listed above and other factors affecting the direction of rates by regularly visiting LendingTree’s daily Rate Lock Recommendation feature .


  • VA Home Loan Closing Costs: What to Expect to Pay – #home #mortgage #loan #calculator


    #mortgage closing costs

    #

    VA Home Loan Closing Costs

    VA Home Purchase Loans

    Getting a home loan and closing on a home purchase comes with costs and fees, no matter what type of loan you re using. VA buyers benefit from limits on what they can pay, but there are still expenses that need to be paid by the buyer.

    When reviewing allowable borrower fees and charges, many of the items can be paid for by the seller of the home and can be negotiable when presenting an offer on a home to the seller. VA allows sellers to pay all of a VA buyer s mortgage loan-related closing costs and up to 4 percent in concessions, which can cover prepaid expenses like property taxes and homeowners insurance. Please consult with your real estate professional handling the transaction to review these expenses.

    Let s take a closer look at some of the costs and fees that can be associated with getting a VA purchase loan.

    CLOSING COSTS

    Reasonable closing costs may be charged by the lender. These costs may not be included in the loan. The following items may be paid by the veteran purchaser, the seller, or shared. Closing costs may vary among lenders and also throughout the nation because of differing local laws and customs and can include:

    • Loan origination fee (usually 1 percent of the loan),
    • Credit report,
    • Discount points,
    • Title search and title insurance,
    • Recording fees,
    • State and/or local transfer taxes, if applicable,
    • Survey,
    • No commissions, brokerage fees or “buyer broker” fees may be charged to the veteran buyer.

    The veteran can pay a maximum of all reasonable and customary amounts for any and all of the “Itemized Fees and Charges” designated by VA as defined below plus a 1% flat charge by the lender plus reasonable discount points. Some special provisions apply to construction, alteration, improvement and repair loans.

    APPRAISAL AND COMPLIANCE INSPECTIONS

    The veteran can pay a VA Appraiser fee and VA compliance inspectors fee. The veteran can also pay for a second appraisal if they are requesting a reconsideration of value. The veteran cannot pay for a second appraisal if the lender or seller is requesting a reconsideration of value or if parties other than the veteran or lender request the appraisal.

    RECORDING FEES

    The veteran can pay for recording fees and recording taxes or other charges incident to recordation.

    CREDIT REPORT

    The veteran can pay for the credit report obtained by the lender.

    PREPAID ITEMS

    The veteran can pay that portion of taxes, assessments, and similar items for the current year chargeable to the borrower and the initial deposit for the tax and insurance account.

    HAZARD INSURANCE

    The veteran can pay for the hazard insurance premium. This includes flood insurance, if required.

    FLOOD ZONE DETERMINATION

    The veteran can pay the actual amount charged for a determination of whether a property is in a special flood hazard area, if made by a third party who guarantees the accuracy of the determination.

    SURVEY

    The veteran can pay a charge for a survey, if required by the lender.

    TITLE EXAMINATION AND TITLE INSURANCE

    The veteran may pay a fee for title examination and title insurance, if any. If the lender decides that an environmental protection lien endorsement to a title policy is needed, the cost of the endorsement may be charged to the veteran.

    FUNDING FEE

    A basic funding fee of 2.15 percent must be paid to VA by all but certain exempt veterans. A down payment of 5 percent or more will reduce the fee to 1.5 percent and a 10 percent down payment will reduce it to 1.25 percent.

    A funding fee of 2.40 percent must be paid by all eligible Reserve/National Guard individuals. A down payment of 5 percent or more will reduce the fee to 1.75 percent and a 10 percent down payment will reduce it to 1.5 percent.

    VA buyers don t have to pay the funding fee in cash. Many choose to finance it into the loan .

    The following persons are exempt from paying the funding fee:

    • Veterans receiving VA compensation for service-connected disabilities.
    • Veterans who would be entitled to receive compensation for service-connected disabilities if they did not receive retirement pay.
    • Surviving spouses of veterans who died in service or from service-connected disabilities (whether or not such surviving spouses are veterans with their own entitlement and whether or not they are using their own entitlement on the loan).

    Please note that the VA has the final say on who is exempt.

    NON-ALLOWABLE FEES

    The following list provides examples of items that CANNOT be charged to the veteran as “itemized fees and charges.” Instead, the lender must cover any cost of these items out of its flat 1% fee.

    • Loan closing or settlement fees,
    • Document preparation fees,
    • Preparing loan papers or conveyance fees,
    • Attorneys services other than for title work,
    • Photographs,
    • Interest rate lock – in fees,
    • Postage and other mailing charges, stationery, telephone calls and other overhead,
    • Amortization schedules,
    • Pass books, and membership or entrance fees,
    • Escrow fees or charges,
    • Notary fees,
    • Preparation and assignment of mortgage to other secondary market purchasers,
    • Trustee’s fees or charges,
    • Loan application or processing fees,
    • Fees for preparation of truth-in-lending disclosure statement, fees charged by loan brokers, finders or other third parties, and
    • Tax service fees.

    COVERING CLOSING COSTS

    Please note that oftentimes veterans believe that closing costs are covered by a VA mortgage. While that is not technically true, the same effect can be reached through careful structuring of your real estate contract.

    The loan amount will be the purchase price or appraised value, whichever is less (plus the VA Funding Fee). So if you want your closing costs covered by the loan, you need to increase the price and have a stipulation that the seller will pay the closings costs and pre-paid expenses equal to the amount by which you have increased the price. As long as the home appraises for the increased price, you will have the closing costs paid as part of the deal. But that also means you re financing this cost over the life of your loan.

    Talk with your real estate agent and lender about your options in more detail.

    Guide to VA Purchase Loans

    1. VA Purchase Loans
    2. VA Loan Requirements
    3. VA Loan Uses
    4. VA Loan Benefits
    5. VA Construction Loans
    6. Manufactured Homes and VA Loans
    7. VA Loan Closing Costs
    8. Mortgage Options

    This is a private website that is not affiliated with the U.S. government, U.S. Armed Forces, or Department of Veteran Affairs. U.S. government agencies have not reviewed this information. This site is not connected with any government agency.

    We Get the Veteran Vote


    What to Expect when Applying for a Commercial Mortgage Loan: Part 1 #capwest #mortgage


    #commercial mortgage

    #

    What to Expect when Applying for a Commercial Mortgage Loan:
    Banks and Private Alternatives
    Part 1

    If you have never borrowed money for your business before, you may be in for a surprise. Whether you want to borrow working capital to expand your business or leverage equity in a commercial real estate venture, you will soon find out the commercial loan process is very different from the more common home mortgage process. Commercial loans, unlike the vast majority of residential mortgages, are not ultimately backed by a governmental entity such as Fannie Mae. Consequently, most commercial lenders are risk-averse; they charge higher interests rate than on a comparable home loan. Some lenders go a step further, scrutinizing the borrower’s business as well as the commercial property that will serve as collateral for the loan. This means that the business borrower should have different expectations when applying for a loan against his commercial property than he would have for a loan secured by his or her primary residence.

    Following is a list of questions the borrower should ask himself and the lender before applying for a commercial loan.

    1. How am I going to meet the loan repayment terms?

    Typically, bank loans require the borrower to repay his or her entire business loan much earlier than its stated due date. Banks do this by requiring most of their loans to include a balloon repayment. This means the borrower will pay interest and principal on his 30-year mortgage at the stated interest rate for the first few years (generally 3, 5 or 10 years) and then repay the entire balance in one balloon payment.

    Many borrowers do not save enough in such a short time frame, so they must either re-qualify for their loan or refinance the loan at the end of the balloon term. If the business happens to have any cash-flow problems in the years immediately preceding the balloon term, the lender may require a higher interest rate, or the borrower may not qualify for a loan at all. If this happens, the borrower runs the risk of being turned down for financing altogether and the property may be in jeopardy of foreclosure.

    A balloon loan has other risks as well. If the borrower’s business is in a “risky” industry at the time the balloon is due (think of the oil and gas bust in the 1980s or the telecom implosion of the 2000s), the lender may back out of all refinancing for the enterprise. Alternatively, a lender simply may decide its loan portfolio has too many loans in a given industry, so he will deny future refinancing within that trade.

    Non-bank lenders generally offer less stringent credit requirements for commercial loans. Some non-bank lenders will make long-term commercial loans without requiring the early balloon repayment. These loans, which may carry a slightly higher interest rate, work like a typical home loan. They allow a steady repayment over twenty or thirty years. It is often worth paying a one- or two-point higher interest rate for a fixed-term loan in order to ensure the security of a long-term loan commitment.

    2. How much can or should I borrow?

    Most bank loans prohibit second mortgages, so the borrower should go into the loan process intending to borrow enough to meet current business needs, or enough to sufficiently leverage real estate investments. For a traditional acquisition loan in which the borrower is buying a new property, banks usually require a down payment of 20-25%. So for a $600,000 acquisition, the borrower will need to come up with $120,000-$150,000 for the down payment.

    Some non-traditional loans will allow the borrower to make a smaller down payment, maximizing the loan-to-value (LTV) at 85-90%. Such loans are generally not bank loans, but are offered by direct commercial lenders or pools of commercial investors. If the customer wants to borrow the maximum amount possible, the interest rate on such loans may be a point or two higher than typical bank loans. Before deciding how much to borrow, potential borrowers should:

    • Evaluate how much cash they are likely to need
    • Analyze their ability to repay the loan as it is structured

    Research has consistently shown that the number one reason behind the failures of most small businesses is the lack of adequate capital to meet cash-flow needs. Because of this it may actually be safer for a small business to leave a larger cushion against unforeseen events by borrowing more money at the slightly higher rate.

    The amount of the loan requested has an effect on which commercial lenders will fund the loan. Small businesses borrowing less than $2,000,000 will visit a different pool of potential lenders than those seeking loans of over $5 million. Small business loans are generally made by direct commercial lenders (easily located by internet searches) or by small local banks. Larger loans are generally made by regional banks, and very large loans are made by mega-banks or Wall Street lenders.


    VA Home Loan Closing Costs: What to Expect to Pay – #best #mortgage #lender


    #mortgage closing costs

    #

    VA Home Loan Closing Costs

    VA Home Purchase Loans

    Getting a home loan and closing on a home purchase comes with costs and fees, no matter what type of loan you re using. VA buyers benefit from limits on what they can pay, but there are still expenses that need to be paid by the buyer.

    When reviewing allowable borrower fees and charges, many of the items can be paid for by the seller of the home and can be negotiable when presenting an offer on a home to the seller. VA allows sellers to pay all of a VA buyer s mortgage loan-related closing costs and up to 4 percent in concessions, which can cover prepaid expenses like property taxes and homeowners insurance. Please consult with your real estate professional handling the transaction to review these expenses.

    Let s take a closer look at some of the costs and fees that can be associated with getting a VA purchase loan.

    CLOSING COSTS

    Reasonable closing costs may be charged by the lender. These costs may not be included in the loan. The following items may be paid by the veteran purchaser, the seller, or shared. Closing costs may vary among lenders and also throughout the nation because of differing local laws and customs and can include:

    • Loan origination fee (usually 1 percent of the loan),
    • Credit report,
    • Discount points,
    • Title search and title insurance,
    • Recording fees,
    • State and/or local transfer taxes, if applicable,
    • Survey,
    • No commissions, brokerage fees or “buyer broker” fees may be charged to the veteran buyer.

    The veteran can pay a maximum of all reasonable and customary amounts for any and all of the “Itemized Fees and Charges” designated by VA as defined below plus a 1% flat charge by the lender plus reasonable discount points. Some special provisions apply to construction, alteration, improvement and repair loans.

    APPRAISAL AND COMPLIANCE INSPECTIONS

    The veteran can pay a VA Appraiser fee and VA compliance inspectors fee. The veteran can also pay for a second appraisal if they are requesting a reconsideration of value. The veteran cannot pay for a second appraisal if the lender or seller is requesting a reconsideration of value or if parties other than the veteran or lender request the appraisal.

    RECORDING FEES

    The veteran can pay for recording fees and recording taxes or other charges incident to recordation.

    CREDIT REPORT

    The veteran can pay for the credit report obtained by the lender.

    PREPAID ITEMS

    The veteran can pay that portion of taxes, assessments, and similar items for the current year chargeable to the borrower and the initial deposit for the tax and insurance account.

    HAZARD INSURANCE

    The veteran can pay for the hazard insurance premium. This includes flood insurance, if required.

    FLOOD ZONE DETERMINATION

    The veteran can pay the actual amount charged for a determination of whether a property is in a special flood hazard area, if made by a third party who guarantees the accuracy of the determination.

    SURVEY

    The veteran can pay a charge for a survey, if required by the lender.

    TITLE EXAMINATION AND TITLE INSURANCE

    The veteran may pay a fee for title examination and title insurance, if any. If the lender decides that an environmental protection lien endorsement to a title policy is needed, the cost of the endorsement may be charged to the veteran.

    FUNDING FEE

    A basic funding fee of 2.15 percent must be paid to VA by all but certain exempt veterans. A down payment of 5 percent or more will reduce the fee to 1.5 percent and a 10 percent down payment will reduce it to 1.25 percent.

    A funding fee of 2.40 percent must be paid by all eligible Reserve/National Guard individuals. A down payment of 5 percent or more will reduce the fee to 1.75 percent and a 10 percent down payment will reduce it to 1.5 percent.

    VA buyers don t have to pay the funding fee in cash. Many choose to finance it into the loan .

    The following persons are exempt from paying the funding fee:

    • Veterans receiving VA compensation for service-connected disabilities.
    • Veterans who would be entitled to receive compensation for service-connected disabilities if they did not receive retirement pay.
    • Surviving spouses of veterans who died in service or from service-connected disabilities (whether or not such surviving spouses are veterans with their own entitlement and whether or not they are using their own entitlement on the loan).

    Please note that the VA has the final say on who is exempt.

    NON-ALLOWABLE FEES

    The following list provides examples of items that CANNOT be charged to the veteran as “itemized fees and charges.” Instead, the lender must cover any cost of these items out of its flat 1% fee.

    • Loan closing or settlement fees,
    • Document preparation fees,
    • Preparing loan papers or conveyance fees,
    • Attorneys services other than for title work,
    • Photographs,
    • Interest rate lock – in fees,
    • Postage and other mailing charges, stationery, telephone calls and other overhead,
    • Amortization schedules,
    • Pass books, and membership or entrance fees,
    • Escrow fees or charges,
    • Notary fees,
    • Preparation and assignment of mortgage to other secondary market purchasers,
    • Trustee’s fees or charges,
    • Loan application or processing fees,
    • Fees for preparation of truth-in-lending disclosure statement, fees charged by loan brokers, finders or other third parties, and
    • Tax service fees.

    COVERING CLOSING COSTS

    Please note that oftentimes veterans believe that closing costs are covered by a VA mortgage. While that is not technically true, the same effect can be reached through careful structuring of your real estate contract.

    The loan amount will be the purchase price or appraised value, whichever is less (plus the VA Funding Fee). So if you want your closing costs covered by the loan, you need to increase the price and have a stipulation that the seller will pay the closings costs and pre-paid expenses equal to the amount by which you have increased the price. As long as the home appraises for the increased price, you will have the closing costs paid as part of the deal. But that also means you re financing this cost over the life of your loan.

    Talk with your real estate agent and lender about your options in more detail.

    Guide to VA Purchase Loans

    1. VA Purchase Loans
    2. VA Loan Requirements
    3. VA Loan Uses
    4. VA Loan Benefits
    5. VA Construction Loans
    6. Manufactured Homes and VA Loans
    7. VA Loan Closing Costs
    8. Mortgage Options

    This is a private website that is not affiliated with the U.S. government, U.S. Armed Forces, or Department of Veteran Affairs. U.S. government agencies have not reviewed this information. This site is not connected with any government agency.

    We Get the Veteran Vote