Commercial Mortgage

Commercial Mortgage

A mortgage used to buy a commercial piece of property or commercial building.

Today, the cost of commercial development is extremely high and most individuals and companies do not keep the cash on hand for commercial developments. Commercial mortgages are available to clients who are searching for financing to cover costs for purchases of commercial buildings, multi-family units, fuel stations and apartment buildings. Commercial lenders have different criteria for each situation.

Adjustable Commercial Mortgage funding is a real estate loan with an interest rate that changes periodically, according to an index that is selected when the mortgage is issued. You might qualify for a larger loan and your ARM could be less expensive than a fixed rate loan over a long period. To compare one Arm with another or with a fixed rate mortgage, you need to know about margins, indexes, discounts, cap structures, convertibility and negative amortization.

Fixed Rate Commercial Mortgage products are mortgages that have fixed interest rate and payment for the full term of the loan. Multi-family, full and limited service hotels, offices, anchored, unanchored, senior housing, light-industrial are typical properties included. Interest rate depends on property type and underwriting criteria.

Commercial Second Mortgages are normally used in conjunction with a new first loan. They will have a term of no less than 5 years with interest only payments. It reduces the LTV (loan to value) of the first loan in order to allow you to more easily qualify for the loan. Interest only payments, annual payments, fees etc are a variety of options that help you to keep your immediate payments down and defer the costs of the second mortgage.

Things you need to know

• Start by shopping where you bank. Your bank or saving and loan may offer attractive terms for existing customers.
• Calculate how much you can afford and pay every month and choose your terms.
• An adjustable rate mortgage typically starts out with a lower rate of interest but can change, which generally means that it could change up or down periodically.
• Mortgage loans for rental property usually require larger down payments with higher interest rates, than mortgages for owner-occupied properties.
• For the best deal, contact a mortgage broker who access to several lenders and can quickly compare rates.
• Learn your rights and responsibilities as a homeowner.
• You can shop online as many lenders offer low rates and quick turnaround.
• Don’t opt for a biweekly mortgage unless your lender confirms that there are no additional charges to do so.