Commercial Mortgage Refinancing

Are you considering refinancing a commercial mortgage? There are several factors to consider that make commercial mortgage refinancing a viable option.
Here are some questions to ask when considering refinancing a commercial mortgage:
Can I get cash out?
Can I lower my interest rate and/or payment?
Are there any balloon payments?
Are there limits on the use of funds?
Are there commercial refinancing options for borrowers with bad credit?
How much are my out of pocket expenses?
Are there any monthly or annual reporting requirements?
What is my borrowing limit?
What are the Loan-to-Value (CLTV) Limits
Can I get cash out?
If you need funds for renovation, repairs, business expansion, or any other reason, a cash out refinance may be a good source of immediate funds.
Can I lower my interest rate and/or payment?
If you are paying high interest or a high payment on your mortgage , you may want to refinance to a lower rate or lower payment to reduce your costs.

Are here any balloon payments?
Balloon payments are common in commercial mortgages. Many borrowers refinance to avoid balloon payments. You may consider a refinancing program that does not require any balloon payments.

Are there limits on the use of funds?
Many lenders have restrictions on the use of funds in a cash out refinance. Be sure to find out if any such restrictions exist in the loan you are trying to get.
Are there options for borrowers with bad credit?
There are many loan options for borrowers with bad credit.
How much are my out of pocket expenses?
Closing costs on a typical transaction include an appraisal and possible points. Expect to pay approximately $3,000 in closing costs to close on a commercial mortgage refinance.
Are there any monthly or annual reporting requirements?
If the borrower does not act in accordance with the monthly or annual reporting requirements, the loan can be considered in default. You want to avoid loans that have such requirements.
What is my borrowing limit?
Commercial mortgage refinances have lower loan limits that commercial purchases. Limits are usually $1-$1.5 million.
What are the Loan-to-Value (CLTV) Limits?
Loan-to-value ratios in commercial refinance loans are as high as 97%.
Are there no doc or limited documentation programs?
No doc or low documentation commercial mortgages typically have higher interest rates and lower loan-to-value ratios.
Eliot Hobbs is a small real estate developer and commercial mortgage referral agent. More information can be found at http://www.dsmallbusinessloans.com

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