Mortgage Loans Guide

Anyone that wants to get into the real estate business is likely going to need some sort of investment property mortgage loan, unless they have a large amount of money that is free for investing. Lots of banks offer special financing for people who want to make a property investment.

These are called investment property mortgage loans, and they have been helping people get started in the real estate industry for years. If you have any property of your own paid off, then you will be able to use it as collateral and get a mortgage loan with good terms and a decent principle that will allow you to follow your real estate dreams.

You should contact all of your local banks to find out what they offer in terms of property investment loans. Keep a notepad with you, and write down the basics of every financing option - the initial interest rate, the maximum available amount, the term, monthly payment plans, the recourse, the fees, and anything else that will have an effect on your borrowed amount. If they have any literature on their financing offerings, be certain to get that as well.

Most of the time, the terms will depend on your credit, and what you have to offer as collateral. Once you’ve got all of this information gathered, you can make use of various tools to analyze your financial prospects.

Initially, you will have to enter all of the data that you gathered into a chart to help you easily compare your available opportunities. First, you should go through and figure out if any of them will be simply unviable for whatever reasons - for example, if you aren’t sure you’ll be able to make the payments on time, you should not consider that deal.

Next, you can use your analysis tool to compare all of the loan options, and figure out which one will be the most profitable, and take the least amount of money from your profits.

Once you’ve determined which property investment offer will be best for you, you should start creating a plan that will outline your investment intentions. This may even be required by the bank, and a loan officer will look over your proposal to ensure that you have a solid business plan. But whether it is compulsory or not, a solidly formed plan will give you personal satisfaction knowing that once you have your investment property mortgage loan, you know exactly what you are going to do with it.

As for tools that will help you compare your financing alternatives, you should investigate all of the options that are available to you. If you use a program that can easily compare your options, then you will save hours of manual work which would have involved performing endless calculations. Using investment software can help you find the best loan and profit as much as possible from your real estate ventures. The technology is available, so make the most of the software.



By: Andrew Stratton

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Congratulations on your decision to dive into the commercial property investment business! While there are many exciting times ahead for you, you will also find there can be some big frustrations as well. Attaining funding is often the most stressful time for any commercial property investor, as well as the one single biggest frustration. However, by better understanding the investment property mortgage loan process you can move easily through the frustrations and on to becoming an investment property owner more quickly.

Similarly to procuring residential home mortgages through a mortgage broker or a bank, you will likely be dealing with a commercial property broker or lender for your commercial property purchase. While your broker and your lender can be of some help to you, if you can do some homework before looking for financing, you can decrease your stress level immensely. This allows you to go into the process better knowing what you can get easy approval for. And, if you are searching for a more complicated approval, you can come to the table with all of the facts the lender is going to want.

Part of doing your homework, prior to talking to a lender, is to understand that there are three common ratios which commercial lenders all use to judge the risk of an investment. If you are educated about these ratios you can come to the table with your lender in a positive position by being significantly prepared. Your preparation will show the lender that you know what you are doing and this will make them more likely to do business with you.

Let’s take a moment and examine these three ratios more closely:

The Debt Coverage Ratio (DCR)

The debt coverage ratio (DCR) describes to the lender how much income the property is producing when compared to the cost of the total debt on the property. The DCR is calculated by taking your net operating income and dividing it by the total of all of the mortgage debt on the property.

Most lenders want to see a DCR of at least 1.2 in order to consider lending money on a property. Any DCR below 1.2 indicates to the lender that the property is probably going to be loosing money. Lenders do not like to lend on a property with that high of a potential for losing.

The Loan-To-Value Ratio (LTV)

The loan-to-value ratio (LTV) is the same as you might associate with residential lending. It is simply the total debt on the property in comparison with the property’s current market value.

While residential lenders are okay with less than 75% LTV, you will find that commercial lenders use 75% LTV as the least they will generally lend on. This means that you will have to retain 25% untapped equity on the property.

Some commercial lenders will go higher than the 75% standard, but you will likely pay more for the debt than you would if you had stayed below that percentage.

The Debt Ratio

Generally for smaller commercial projects the commercial lenders will require you to submit a personal financial statement as a guarantee on the potential loan. The debt ratio will be your own personal monthly housing expenses divided by your own personal monthly gross income.

The debt ratio shows the lender how much money you have personally which is not already allocated to your living expenses each month. Most commercial lenders will not lend to you if your personal debt ratio is above 25%. Some have been known to lend up to 36% however, again, you will pay a premium for that loan.

Before you approach a lender you will want to understand these three ratios and run the numbers for your unique situation. By determining if financing will be easy or difficult, from the start of your project; you can better work with the commercial investment property mortgage lenders. Any loan is possible, but they are more probably when you have done your homework before talking to a lender.



By: Andrew Stratton

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Mortgages are one good way of securing your home Loan. However not everyone can opt fort mortgage loanor not everyone can get a good deal on mortgage loans. A number of people bear bad credit history due to their unnecessary spending in the past and not paying the bills on time. For such people it was very tough to get a mortgage loan until the financialinstitutions introduced bad credit mortgage loans which are specially aimed and designed for people who have bad credit history.

Terms and conditions of Bad Credit Mortgage loans:

The idea of bad credit mortgage loans was not borne because of compassion but was an initiative towards making profit from the odds. Taking this strategy in mind and the desperate need of people having bad credit for mortgage, bad credit mortgage loans were designed with a higher interest than normal to make profit.

The tenure of bad credit mortgage loans is usually the same like in conventional mortgage loans.

The golden down payment rule!

The golden down payment rule remains the same in bad credit mortgage loans too that is the higher your down payment is the lower will be your tenure or monthly installments. Usually the down payment is around 10% of the total loan amount however if the consumer wishes he can make a higher down payment.

Your credit history counts…

Having a bad credit history is not just a reason to opt for bad mortgage loans. The down payment of your loan amount is largely dependant on your credit scores. For instance, if you have a credit score lesser than 490 then your down payment becomes approximately 30% of the loan amount. The higher your credit scores the lesser down payment you’ll have to pay.



By: Amasch McAndrew

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Many business borrowers do not prepare adequately for the commercial mortgage business loan problems that are common in most business financing scenarios. By anticipating typical commercial loan difficulties, business owners are more likely to avoid potentially disastrous business finance consequences.

With rapidly deteriorating financing for residential investment property, overcoming business loan and commercial mortgage problems is even more important. This summary provides an introduction to four critical commercial loan factors and should assist commercial borrowers to better anticipate key business financing difficulties.

It is not unusual to find that business investment lenders and business loan brokers are not as forward-looking about business financing and investing difficulties as most borrowers would expect, and I have published another article about commercial lenders to avoid. The focus here is on four typical commercial mortgage loan and SBA business loan difficulties often overlooked by commercial lenders and borrowers.

Commercial borrowers should be prepared for commercial loan scenarios that involve unexpected business financing problems. With business financing there are several key commercial mortgage problems which should be avoided. Business loan problems are more serious and prevalent than many borrowers would imagine.

Some of these commercial mortgage business loan difficulties might be unavoidable, but in most cases these business financing and SBA loan challenges can be successfully overcome. Commercial borrowers will be poised to take proper corrective action if they are aware of common commercial loan difficulties.

Avoidable Commercial Real Estate Investment Property Financing Scenario Number One: Use of secondary business financing -

Many commercial borrowers want the flexibility to use subordinated debt (a seller second or other secondary financing) in order to acquire a commercial property or business opportunity investment with a smaller down payment. Many forms of business investing will not permit a seller second or other forms of subordinated debt. With a commercial loan via non-traditional business lenders, a commercial borrower can use subordinate business financing (including seller seconds) to reduce the amount of their down payment.

Commercial Mortgage Example Number Two: Sourcing-seasoning assets and seasoning of ownership -

Some commercial lenders will require borrowers to document the source of the down payment for a purchase (sourcing). Many business lenders require borrowers to document where down payment money is coming from, often for up to 12 months in order to provide seasoning confirmation. Ownership seasoning is determined by establishing a minimum period for ownership prior to being eligible for refinancing.

Such a problem will probably not deter all borrowers. When it does apply, business borrowers should insist on a lender without seasoning and sourcing requirements.

Business Financing Example Number Three: Commercial mortgage recall terms -

Business loan recall conditions will often allow the commercial lender to force the borrower to repay their loan before the normal loan expiration. If a commercial loan agreement does not include recall terms, such a possibility is not of immediate concern to a borrower.

Commercial lenders will routinely include recall conditions in a business loan agreement. The provisions which will prompt a recall will vary and typically include annual business lender monitoring of financial statements, tax returns and credit history. Without agreed income, tax returns and credit standards, the lender can choose to require the borrower to pay off the commercial loan within a very short period of time.

Contingency Plans for Business Finance Recalls: What to do about a commercial loan recall -

To avoid an unanticipated recall scenario, commercial borrowers would be wise to consider only commercial loans which do not have recall terms. For commercial borrowers who have recall provisions in their business financing agreement, it will be equally wise to consider refinancing their business loan or commercial mortgage before a recall occurs so that refinancing is accomplished when it is most appropriate for the borrower.

When borrowers receive a business financing recall, they must quickly obtain refinancing assistance. When reviewing commercial loan choices for refinancing, borrowers should attempt to exclude potential lenders that require recall terms.

Business Loan Example Number Four: Business financing that needs a long-term commercial loan -

Is long-term investing and financing really possible for a business loan? Some business investment lenders will only offer 5 years (or less) before commercial real estate financing will expire with a balloon payment due.

There are commercial mortgage programs which can provide long-term financing, even though many lenders will only offer shorter-term options for investment business financing. Longer-term commercial real estate financing will often be the critical difference that facilitates a successful business investment because a new business loan will not be required for many years and commercial loan payments will also be reduced.

Additional Commercial Loan Problems and Solutions -

Unfortunately commercial borrowers will frequently encounter commercial mortgage business loan problems similar to those described here. To better prepare for this, an advisable approach is to explore business financing resources that will facilitate a better understanding of complex commercial loan issues. The Commercial Real Estate Loan Guide and The Working Capital Management Guide are two examples of business finance resources that will provide possible solutions for many difficult commercial financing situations.



By: Stephen Bush

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Bad credit can increase the difficulty that a homeowner encounters when seeking a home loan. Bad credit can be the reason for a poor credit score. Homeowners with a poor score will need to pay higher interest payments. A score above 700 is assurance of good interest rates. The credit score also serves as an indicator of whether or not a lender should accept a homeowner’s application for credit. Decisions on credit limits for the homeowner are likewise based on the homeowner’s credit score.

A bad credit home loan is a loan that one can get despite having a bad credit rating. Many lenders offer a bad credit home loan knowing fully that their loan is secure, since it is taken on mortgage of your home. By availing of a bad credit home loan you can lower your monthly payments by consolidating all your debts and also enjoy a lower interest rate on the current debt. The consolidation and paying off your current debts by availing of a bad credit home loan is a major step towards credit repair.

When you are looking for home loans with bad credit you will probably want to look into what is called a subprime loan. This is a loan to persons with a damaged credit history and would be considered a high risk borrower. Because of the higher risk, subprime loans normally require a larger down payment and a higher interest rate. The higher the risk the lender feels you are, based on credit scores and other factors the higher the rate to borrow will be.

Most popular options available on bad credit home loans are cash out mortgage refinance and home equity loans. Both options allow you to cash in on the equity already paid into your home mortgage and use it to get yourself out of debt. It’s best to deal with a mortgage company online to avoid bank associate’s talk around and skepticism. Its also easier to compare various offers form different lenders to make sure you are not being cheated.

However, it’s not absolutely impossible to find lenders who give out loans at reasonable rates and agreeable charges, to people who have a bad credit history. All a borrower needs to do is look around and talk to different mortgage brokers, which would prove to be helpful to find a lender, that can get them an approved loan with a reasonable interest rate and fair terms of repayment.

People with a bad credit history and bad credit score should make sure that he sends application for loans to a number of different lenders, since it would be sensible for him to make comparison between different mortgage loan quotes, so that he makes sure that he chooses the best one. Use your bad credit home loan to the maximum advantage to get your credit rating back in line.

Once the homeowner has a good credit score then he will want to avoid slipping back into that region of bad credit.



By: zhafran

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Most business borrowers will be unpleasantly surprised by the problems generally experienced with typical business financing. Perhaps of even more concern is that many serious commercial loan difficulties are not widely known even by loan advisors. The potential difficulties can occur with business opportunity financing, real estate investment property loans and business cash advance services, although some of the issues will be restricted to specific circumstances.

Commercial Loan Advisory Reports -

We have published separate commercial loan advisory reports which provide a comprehensive discussion of the major problems likely to be encountered in typical business financing and commercial real estate loan circumstances. For example, one report focuses on common business opportunity investment financing difficulties. In another report, we discussed the obstacles usually experienced with SBA loan refinancing.

The Black Ice Analogy: Unseen Business Financing Problems -

The focus in this article is to highlight several of the more obscure commercial loan problems. A commercial borrower should consider such obscure business financing problems to be extremely important. When ice is virtually invisible on a road surface, this is usually referred to as black ice. Drivers who have experienced this hazardous condition are likely to realize that invisible business finance problems are equally dangerous for the financial health of a business.

Online Business Finance Applications -

The first relatively unknown business financing problem involves the increasing use of internet technology by commercial lenders. Commercial borrowers will be asked to submit online applications by numerous commercial loan websites. This is not a prudent way for a business owner to proceed with their commercial financing.

It is important that business owners understand that it is not in their best interest to submit an online business financing application. For a more detailed understanding of why an online commercial loan application is inadvisable and how to proceed in a search for viable financing, borrowers should review the report entitled How and Why to Avoid the Online Business Loan Application Trap.

Recall Provisions for a Commercial Mortgage -

The next obscure but nevertheless serious business financing problem to anticipate involves the use of loan recall terms by a lender. Commercial loan recall covenants mean that the lender can force the borrower to repay early by calling the loan before it would normally expire. Many traditional commercial lenders routinely place recall clauses in their commercial mortgage conditions, but this potential concern is not applicable to all borrowers since some financing agreements will not allow a loan recall possibility.

The circumstances which can cause a recall will vary but can commonly include periodic lender review of financial statements, tax returns and credit history. If prescribed levels of income, credit scores or other benchmarks are not present, then the lender will typically notify the commercial borrower that they must pay off the loan within a 30-90 day period.

With a commercial loan recall, borrowers will need to refinance quickly. Prudent borrowers will exclude lenders that require recall agreements when evaluating business financing options. For commercial borrowers who have recall provisions in their current business loan agreement, it will be equally wise to consider refinancing their commercial mortgage before a recall occurs so that refinancing is accomplished according to the preferred timetable of the business owner.

Balloon Payments and Short-term Business Loans -

Another often overlooked commercial financing problem is the increasing emphasis on short-term financing by many commercial lenders. How long is a long-term commercial loan? Depending on individual business financing circumstances, the preferred loan period is likely to be between 10 and 30 years. Unfortunately many business lenders often consider three years as the maximum period before a balloon payment will be due for a commercial mortgage.

With a balloon payment condition, a business owner will be required to either pay the remaining loan balance or refinance. This kind of loan is a short-term commercial loan instead of long-term and should be avoided whenever feasible. Longer-term business financing will often be the critical difference that facilitates a successful business investment because new financing will not be required for many years and business loan payments will usually be reduced.

Inexperienced Commercial Real Estate Loan Lenders and Advisors -

The final example of a problem that is not obvious to most commercial borrowers involves a shortage of business loan experts providing candid advice to business owners. Business financing and business investing has become increasingly specialized in recent years. There have been some recent real estate and business investment developments that have made this process even more complicated. The current turmoil in residential real estate investment property has resulted in an increasing number of residential lenders and advisors attempting to become active in commercial loan activities.

This is an almost impossible transition for most residential lenders and advisors. There are over 25 critical differences between residential and commercial property investing. As a result, these new and inexperienced commercial financing advisors frequently provide woefully inadequate advice and potentially disastrous business financing for their clients.

How to Avoid These and Other Commercial Financing Problems -

What can commercial borrowers do to avoid a similar fate? To acquire a thorough understanding of these and other business finance complications, prudent borrowers will review other resources. The Commercial Real Estate Investment Property Loan and Business Finance Guide is one example of business financing resources that will provide strategies and solutions for many problematic commercial loan circumstances.



By: Stephen Bush

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