Mortgage Refinance on a commercial property can be tricky, but it is possible to prepare yourself by becoming very familiar with how the process works, what to beware of and some of the terminology, this will help you understand what to expect at the same time increasing your knowledge.
Two of the main reasons people look at Mortgage Refinance, is to help reduce monthly payments and interest, in my opinion one of the most important items to look at is how closing costs will affect the equity you have built over the years.
If you think back to when you applied for your original Commercial Mortgage Finance, you will remember specific terminology some what different than that of Loan Refinance. You had to think about the price of the commercial property, the time it will take to secure a loan this size, it is possible for the amount of time specified on the contract to run out before you get funded, protection from default on such a big loan, not to mention collateral, down payment, closing costs and so on, not too unlike a mortgage on a house.
Long before you ever dreamed of a Mortgage Refinance you had to make sure you can handle such responsibility with the original commercial loan by speaking to your Financial Advisor and your Accountant about how long your finances could carry the loan if things don’t go as planned.
It is very important to look at how closing costs will affect the equity you have been building over the years. Your situation is a little different and you will need to approach the Mortgage Refinance accordingly. You will now start looking at possible Prepayment Penalties, Cash Out Proceeds, and maybe you want to Inject the money you cash out into another property or update your current property, what is the Discounted Cash Flow, Current vs. Proposed Loan to Value Ratio.
Do a simple break even analysis to compare costs of other lenders versus your existing bank. If they know you are looking for a Mortgage Refinance, your current bank may offer to reset the loan.
You will find out some things are a little different when it comes to Mortgage Refinance. The terminology is a little bit different. You start looking at possible Cash Out Proceeds, and maybe you want to inject the money you cash out into another property or use it to remodel the current property, what is the Discounted Cash Flow, Current vs. Proposed, will you have prepayment penalties?
Remember, knowledge is power, stay informed by reading and researching your topic. Be very clear about your reasons for Mortgage Refinance so you won’t make mistakes that could cost you more in the long run.
Viewed 57 times by 19 viewers
