Tag: commercial mortgage

When you are looking for business funding for a commercial mortgage, it is important to know the loan terms that will be required of you. One of the most important to understand is whether your commercial real estate loan is designated as recourse or non-recourse. Recourse Commercial Mortgages A recourse loan requires that the borrower is personally liable for the balance of the loan. That means that if the loan goes into default, the lender can seize and liquidate not only the collateral associated […]

Every business is unique. No two companies will have the exact same financial needs. Before starting a scramble for business funding, it helps to think hard about the specific essentials for your company. Once you have a list in place you can then determine the best source of business financing for your operating requirements. The following inventory of needs may aid you in the process: Office Space Does your business need an actual facility in order to function? Starting out in your home or […]

Some people get commercial mortgages to buy their own business space. Others get them to invest in real estate. Whatever the reason, there are at least 6 essential terms that commercial mortgage borrowers need to be familiar with before signing on the dotted line. 1. Amortization Commercial loans are amortized, meaning that the principal and interest required are spread out together over the life of the loan. That means every payment includes both principal and interest. Yet commercial loans […]

You may be familiar with the structure of residential mortgages, but how do they compare to commercial mortgages

Getting started in the commercial mortgage market can be daunting if you are not familiar with the jargon. In order to be a savvy commercial real estate investor, you first need to learn the lingo. Here are seven of the most important terms used in commercial mortgage discussions: 1. Gross Income This is the total amount of money the commercial property will bring in. It include rents as well as things like late fees or laundry/vending machine revenue. 2. Effective Gross Income This factors […]

When the commercial lending market climate is dry, buyers and sellers of commercial real estate start looking for creative financing solutions. One possible alternative is called a “wraparound” mortgage. While not without its risks, a wraparound mortgage can create mutually beneficial sales when no mortgage credit is available. A wraparound mortgage is when a seller provides financing to the buyer directly. The seller holds onto the original mortgage. The buyer makes a down payment to the […]

Many business owners take on commercial mortgage loans in order to buy their own work facilities and real estate. In some cases, these commercial mortgages will have a balloon payment attached to them – a lump sum payment to repay the balance of the loan after three, five or ten years. Coming up with a chunk of cash that large is virtually impossible for most businesses, but there are several options to make these loans work. Balloon payments are a way for lenders to reduce their risk and recoup […]

Commercial mortgages and residential home loans are both loans taken out on properties and they both use the property itself as collateral. What makes them different from each other? As a business owner, what do you need to know about making a commercial mortgage agreement? Borrowers While residential mortgages are usually between banks and individual buyers, a commercial mortgage is made to a company or business. An individual could sign on to a commercial loan but since the property is zoned […]

If your business is ready take the plunge and invest in its own commercial real estate, the biggest hurdle is often finding the funding. Lenders require very detailed documentation and projections for commercial mortgages. Before you hand in your application, here are a few items to check off your list: Have You Collected All Pertinent Documents? Whether or not your bank requires all of these records, it would be smart to have things like insurance quotes for the commercial property and the […]

Unlike the residential mortgage where personal income is critical, the commercial debt service coverage ratio is measures the income created by the property.