The Vital Steps - Refinance Your Commercial Mortgage and Retain Your Property
There might be several reasons for refinancing your commercial mortgage. It might be outrageously high interest rates or inability to bear the monthly payments or even a job loss. You might want to avoid an upcoming balloon payment to lower the long term interest rate of the loan. The present condition in the real estate market has always meant a landscape change for the business organizations which were interested to work with the lenders. It is worth knowing that there are ways in which you can refinance your commercial mortgage loan and save a lump sum amount of your dollars.
1. Consider the reason of refinancing: The very first consideration should be why you would want to refinance your commercial mortgage loan. Do you need money for improvements and repairs? Are you seeking a cash-out refinance loan? If the present loan product has an adjustable rate which is making monthly installments a huge issue, you can certainly investigate the benefits of settling with a fixed rate loan. If there are approaching balloon payments, you might as well opt for a refinance mortgage loan as this is certainly a cost-effective alternative.
2. Assemble all the required documents: When you opt for a commercial refinance mortgage loan, you have to assemble a number of documents so that the lender doesn’t ask for anything else while offering you the mortgage refinance loan. They might check your tax returns, your income statements, the revenue that you generate and some other details. Have all these documents ready so that you don’t have to delay the process due to mistakes of your own.
3. Know the present valuation of the property: You should be aware of the present valuation of the commercial property that you’re about to refinance. In the present housing market, the value of the property might have changed significantly since the funding of the original first mortgage loan and this will in turn change your loan-to-value ratio or the LTV ratio and this might even mean that you would require coming back with additional equity for qualifying for the mortgage refinance loan.
4. Consider the impact of credit : You should also consider the impact of credit score on your mortgage refinancing ability. The lender will certainly require a stellar personal credit rating as this will mean that you have been a good manager of your debts and personal finances. If you don’t have a good score, you should take the required credit repair steps through which you can emerge as a good borrower who can qualify for a reasonable rate.
5. Find out the upfront costs: If you were of the opinion that taking out a commercial mortgage loan only involves paying the interest rate, you’re grossly mistaken. There are many other costs which are associated with the entire process of taking out a refinance loan or a first mortgage loan. You have to take into account the title insurance fees, the appraisal fees, the lender processing fees, the environmental reports and the closing costs. All such costs can add up to an extra thousand dollars and hence you should always take such costs into account before taking the final plunge. You might even use a mortgage calculator so as to make the required calculations.
Therefore, when you’re about to refinance a commercial mortgage loan, you should be aware of the above-mentioned steps. Shop around and get multiple quotes from multiple companies so that you might choose the best commercial mortgage refinance rate. Also manage your finances in the best way possible and make timely payments on the new loan so that you can avoid a bad hit on your credit score.
By Outside Source