One reason I'm known as the "Inn Expert" is that
I understand that buying real estate often means
getting a loan and I know how to make that happen.
COMMERCIAL LOANS
SBA
The SBA (Small Business Association), has
favorable and flexible loan programs often
overlooked by purchasers. These loans are available
for businesses on leased OR purchased property.
You need not have experience in the hospitality
industry to get an SBA loan. And the paperwork is
more manageable than most people think.
Down payment is usually 10% of the total project
cost, including, but not limited to purchase price,
operating costs, renovation and redecorating.
Interest rates typically range from one to two
percent over the prime rate. Amortization is often
up to 25 years, not 15 to 20 as is typical with
other lenders.
In North Florida, I work with lenders familiar with
hospitality properties such as bed and breakfasts,
motels and restaurants. SBA "Packagers" can help you
prepare a loan package for a fee of $1,000 to $4,500
in two to five weeks. I can put one together for you
in a few days at no charge when you buy a property
through me. For more information email
darlene@innexpert.com.
Preferred Lender - A financial institution
that is approved by SBA to underwrite approved loans
guaranteed by the SBA's 7A program.
For a referral to preferred lenders that work with
my clients, email or call me and I will gladly share
my contacts in the North Florida area, CALL
904-501-4960.
When selecting a commercial lender there are three
essential factors to consider.
- Is the lender active? Ask the lender how
many SBA loans they underwrite a month. You want
to work with a lender who concentrates on your
type of loan so the process goes quickly from
application to closing.
- Is the loan approved at the local level of
the financial institution or do they send it to
an underwriting center unfamiliar with the
market where your property is located? If your
application is sent out of town, it may decrease
the chances of approval and increase the amount
of time to grant a conditional acceptance.
- Does the lender allow closing costs,
operating funds, and renovation costs to be
included in the loan amount? Many lenders will
not allow these expenses and you will have less
flexibility in structuring your financing.
Conventional Loans - The only security
guarantee is the value of the property.
Conforming Loans
Conventional loans that follow the terms and
conditions established by the guidelines of Fannie
Mae and Freddie Mac.
- Fixed-Rate Mortgage
The interest rate and the principal payments
remain fixed throughout the loan. Keep in mind
your monthly escrow account payment could vary
from year-to-year as taxes and insurance rates
change.
- Variable or Adjustable-Rate Mortgage
The interest rate on the loan fluctuates over
the period of the loan. Periodic adjustments to
the interest rate are made based on changes to a
defined index. The loan's interest rate is
determined by adding a fixed number of points to
the defined index.
- Balloon Loan
Short term, fixed-rate mortgage that has monthly
payments usually based on a 30-year amortization
schedule and a lump sum payment due at the end
of term, usually 3, 5 or 7 years. The interest
rate on balloon loans is usually less than a 15-
or 30-year fixed-rate mortgage.
- Piggyback Loan
A second mortgage that closes with the first.
Often the first mortgage is for 80% of the
purchase price and the "piggyback" is for 10%.
The home buyer covers the remaining 10% with
their down payment. (Some lenders will write a
second mortgage of 15% or even 20% of the
purchase price.)
- Housing Finance Agencies
These agencies offer special loan programs to
low- and moderate-income buyers, buyers
interested in rehabilitating a home in a
targeted area, and other groups as defined by
the agency. Working through a housing finance
agency, you can receive a below market interest
rate, down payment assistance and other
incentives. Find
your local housing finance agency >
- Jumbo and Non-Conforming Loans
Loans above the maximum amount established by
the guidelines of Fannie Mae and Freddie Mac.
Often the interest rate charged for a jumbo or
non-conforming loan is higher than that of a
conforming loan.
- B/C Loans
Loans for borrowers who cannot meet the credit
guidelines established by Fannie Mae and Freddie
Mac. The purpose is to offer temporary financing
to someone whose credit history disqualifies
them for a conforming loan (including someone
who has recently filed for bankruptcy,
foreclosure or late payment on their credit
report). Typically the interest rates run higher
and vary depending upon the individual credit
situation.
Government
SBA Loans. See above.
FHA Loans
The Federal Housing Authority (FHA), which is part
of the U.S. Department of Housing and Urban
Development (HUD), plays a significant role in
helping low- to moderate-income families qualify for
mortgages. FHA assists first-time buyers and others
who would not qualify for a conventional loan, by
providing mortgage insurance to private lenders.
Interest rates for an FHA loan are usually the going
market rate, while the down payment requirements for
an FHA loan are lower than conventional loans. The
required down payment can be as low as 3 percent and
the closing costs can be included in the mortgage
amount.
VA Loans
VA Loans are guaranteed by the U.S. Department of
Veterans Affairs. Service persons and veterans can
qualify for a VA Loan, which usually offers a
competitive fixed interest rate, no down payment and
limited closing costs. While the VA does not issue
the loans, it does issue a certificate of
eligibility required to apply for a VA loan.
RHS Loan Programs
The Rural Housing Service (RHS), which is part of
the U.S. Department of Agriculture, guarantees loans
from private lenders to help low- to moderate income
families qualify for mortgages. |
