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FAQ - How Does Commercial Real Estate Loans Work?
Didier Malagies • March 16, 2022
Commercial real estate loans are similar to residential mortgages, but they usually require a shorter repayment period and a higher down payment.
These loans are typically used by certain business entities, like a limited liability company, an s-corporation, a c-corporation, or sole proprietorships. This is because commercial real estate is typically valued at several hundred thousand dollars in many cases.
Commercial real estate loans are different from other types of business loans. You'll need to discuss the specifics of your situation with your advisor to determine if you qualify and what types of loan terms you can expect. If you don't have a commercial advisor, contact DDA Mortgage today.
Here's how the process commercial loan process usually works:
You start the application processes.
You will complete a simple form to gather basic information about you, your business, and your goals. Here's an example of the form we start with, commercial pre-qualifications.
An advisor will review your circumstances.
An advisor will meet with you over the phone or in-person to discuss your application and ask you more questions about what you are hoping to accomplish, how much money you might need, and other general financing questions.
You and your advisor will determine the best loan type.
Now that you have a good idea of what you want to accomplish, you and your advisor will look at loan types and layout options depending on loan size, property type, downpayment, credit scores and a variety of other factors.
You will provide documentation.
Your advisor will work with you on gathering all the financial, business, and personal documentation needed to shop your loan to various banks and lenders.
Your advisor will prepare your application and look for the best rates and terms.
Your advisor will prepare your application and may ask for additional information. They will review your application as second time before submitting it to various lenders.
A lender will accept your application.
You and your advisor will review various lender options based on who accepts your application. You will select a lender and start the application process.
Underwriting will verify your application.
A third party will verify your application and will request additional documentation, inspections, and a various other tasks depending on the loan type and the property.
Close on your loan
Depending on the term of your contract, you will have a closing date. On that date, you will complete all the paperwork, wire money, and the property will be financed.
Above is a generalized overview of the commercial loan processes. For more information about how it will work for you, talk to our commercial experts. Call (727) 784-5555. Or ask a question using the form below.
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If you need working capital for your business, you’ve come to the right place. We can get you up to $150,000 in financing in as little as 2 weeks. And unlike traditional banks and other lenders, we are here to help you throughout the process to make sure you get funded. Our program is designed to give businesses like yours access to cash when they need it most. The best part? There is no cash flow analysis, no debt refi, no equipment requirement - just working capital. You can get 30% of your top line, gross revenue from your last tax returns. To qualify for the loan you will need: To be self-employed for 2 years. Have a 680 FICO score or higher. Have a 155 biz score or higher. Access to working capital can help your business in many ways: Working capital loans can help with covering payroll. Some businesses have cash flow problems because they have to pay their employees before they get paid. This can be a problem for startups, especially if the business owner is also an employee. Working capital loans can help you cover payroll and other expenses until you receive payment from clients. Working capital loans can help with buying inventory. The cost of inventory is one of the biggest expenses for most businesses. Working capital loans can help you buy inventory quickly and easily so that you don't have to wait for your customers to pay their bills before they can receive it. Working capital loans can help with rent and building expenses. Rent and building expenses are ongoing costs that must be paid every month regardless of whether or not there have been any sales in that month. Working capital loans help businesses pay these bills on time so that they don't fall behind. There is no obligation to start the lending processes. Just an obligation to yourself to figure out what's best for you. Find out more about how much you can borrow to help you finance your working capital! Complete the form below and one of our advisors will reach out to you. Or, give us a call at (727) 784-5555 and we will be happy to answer all of your questions.
The process of seeking a commercial loan in Florida can be overwhelming.
For doggy daycare owners and buyers, there are two main types of Government Subsidized Loans that can help you buy or grow your business .
The Small Business Administration (SBA) 504 loan is a long-term financing tool for growing small businesses.
The Small Business Administration (SBA) 504 loan is a long-term financing tool for growing small businesses.
Tax season is a great time to take stock of your company's financial situation and look ahead to the next year.
As a business owner, you need to know why commercial loans are important, how it works, and what is available to you.
For small business owners, there are three main types of commercial real estate loans: conventional commercial loans, SBA 7(a) loans and SBA 504 loans.
Commercial real estate loans are a lot like a residential mortgage. However, the programs, terms, and types vary.
Check out our other helpful videos to learn more about credit and residential mortgages.
A dedicated aging in place (AIP) program offered by the Oswego County Habitat for Humanity (OCHFH) in New York says it is seeing success by incorporating family, community and local resources to ensure older homeowners can remain where they prefer. “It’s been projected that, over the next 20 years, households led by individuals in their 80s will become the fastest growing age group , which provides stability within their communities,” said Samuel Raponi, OCHFH executive director. Through the organization’s AIP program, Habitat collaborates with families, local organizations and other community members in an effort to provide homes that prioritize living for older adults, he said. “This ultimately enhances their quality of life. We employ two different assessments in each case to ensure that the homeowners’ needs are clearly understood,” he added. An initial assessment of the client’s living situation aims to assess each person’s daily living activities, which are scrutinized by a “health or human services professional,” the organization said. This includes how they manage regular tasks like cleaning, shopping, paying bills or interacting with their community. A second evaluation specifically assesses home repair needs, and how to make a dwelling more livable for the needs of an older person. “These assessments enable OCHFH to provide modifications to their homes tailored to each homeowner’s specific lifestyle,” Raponi added. “Among the kinds of modifications we make are installing lever door handles, ramps, railings, grab bars, walk-in showers with a low threshold, and raised toilets to make homes more accessible for older adults.” Other resources, including Meals on Wheels , may be seen as necessary to deploy depending on a person’s circumstances, and all combine into a living situation that is aimed at being more generally beneficial for someone seeking to age in their own home. AIP is actively seeking more collaborative partners in the health care sector, owing to unique challenges visited upon older people who may not be able to adequately address their health needs. “Low-income older adults face a higher risk of chronic diseases and disabilities due to limited access to primary care and a greater likelihood of living in substandard, deteriorating housing,” Raponi added. A recent study from Carewell suggested that many older adults see aging in place as a financial necessity considering the costs of other kinds of living arrangements older people may choose. Nearly half of respondents (47%) characterized aging in place as both a preference and a financial necessity in tandem.
1. Assess Your Financial Health Credit Score: Check your credit score (usually 620 or higher is required, though higher scores get better rates). Debt-to-Income Ratio (DTI): Calculate your monthly debt payments compared to your gross monthly income (lenders typically prefer a DTI below 43%). Savings: Ensure you have enough for a down payment (typically 3-20%) and closing costs. 2. Gather Financial Information Lenders will need the following: Proof of income (pay stubs, tax returns, W-2s/1099s). List of assets (savings, investments, retirement accounts). Details of current debts (credit card balances, student loans, etc.). 3. Choose a Lender Research different lenders, including banks, credit unions, and online lenders. Compare prequalification options (many allow online applications). 4. Complete the Prequalification Process Fill out the lender’s prequalification form (online, over the phone, or in person). Provide basic details about your income, debts, and assets. 5. Review Prequalification Results The lender will give you an estimate of the loan amount and potential interest rate. Remember, prequalification is not a guarantee of approval and doesn’t involve a hard credit inquiry. 6. Follow Up with Preapproval If you’re serious about buying, consider getting preapproved, which involves a more in-depth review and is stronger than prequalification. Tips: Use online calculators to estimate affordability before reaching out to lenders. Avoid large purchases or opening new lines of credit during the prequalification and preapproval process. Would you like details on specific lenders or tools to compare mortgage options? tune in and learn at https://www.ddamortgage.com/blog didier malagies nmls#212566 dda mortgage nmls#324329
Many retirees have said they rely largely — and sometimes entirely — on Social Security benefits as their primary income stream in retirement . But in instances where these payments may not be enough to make ends meet, other options should be considered — and in the right situation, a reverse mortgage could be one such option. That’s according to a column published this week by USA Today , which assessed reverse mortgages in tandem with options such as personal savings, a part-time job and other benefits programs. “A reverse mortgage is a possibility for seniors with substantial equity in their homes,” the column stated. “It essentially enables you to borrow against your equity, and you aren’t required to make any payments while you’re still alive as long as you live in the house.” The column is likely referencing the Home Equity Conversion Mortgage ( HECM ) program insured by the Federal Housing Administration (FHA). Loan proceeds are dependent on the amount of equity in the home and current interest rates, the column noted, and there are multiple disbursement options available, the column noted. The minimum age requirement of 62, a core tenet of the HECM program, was also mentioned. “There are closing costs and other fees, and you’ll still be responsible for maintaining the property and paying the property taxes and homeowners insurance,” the column noted. It characterized the loan as a “solid option” for those who have few other assets beyond their homes, adding that “it might not be the right move if you intend to pass the property on to your heirs someday. After you pass away or move out of the home, you or your estate will have to repay the loan. This will reduce how much your heirs receive.” Recent survey data from Clever Real Estate highlighted some realities of relying on Social Security benefits in retirement. Roughly one in five respondents in the 1,000-person survey said they rely exclusively on Social Security benefits as their sole income stream in retirement, with nearly 30% saying they believed they would be able to rely on them. Last year, data from Nationwide suggested that an increasing number of older investors believe that retiring at the age of 65 is no longer a realistic option . This is largely tied to higher levels of stress they’re feeling about the economy and the cost of living.
