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Construction
Insurance and Real Estate
Timely articles covering the most pressing issues
facing construction firms in the Midwest
Commercial mortgage
refresher course
by Adam Smith
SALT LAKE CITY, UT October 23,
2005 – Securing financing is a real need for
almost every business, particularly for those
interested in real estate investments. Most
investors realize the hardest thing to come up
with is the actual cash to make the investment in
an income property. Granted, it is never easy to
find others to invest their money in your real
estate project, but perhaps it is not as hard as
many would lead you to believe. In fact, many
banks and financial service institutions offer a
variety of options acquiring the funds necessary
to make an investment. One of the best ways to
fund an income or rental property is by using a
commercial mortgage. Most any bank will offer
some version of a commercial mortgage.
Commercial mortgage
A commercial mortgage may be a new term to you,
but chances are you are already quite familiar
with the fundamentals that make up a commercial
mortgage. If you have ever owned your own home,
then you likely took out a mortgage to pay off
the seller of the house. A home mortgage is not
much different than a commercial mortgage. Just
as a home mortgage is secured against the land
and the structure built on that land, so too is a
commercial mortgage. Taking out a commercial
mortgage will typically result in set monthly
payments on the loan in much the same manner as a
home mortgage functions.
With that basic understanding of what a
commercial mortgage is, now you are empowered
with a viable option for financing the investment
property you are interested in purchasing. Before
you take out the mortgage, you will want to shop
around for competitive terms. Some banks will
offer more competitive interest rates than
others. It is also important to note that some
banks will have prepayment penalties while others
may not assess any penalty for paying the loan
off ahead of time. If you plan on paying off the
loan before it matures, it will be important to
find a bank that doesn’t assess prepayment
penalties.
Mortgage bridge loan
If you are already familiar with the commercial
mortgage process and are just looking for a
short-term loan that will aid you in moving from
one investment property to another in a
relatively short time frame, you should consider
a mortgage bridge loan. A mortgage bridge loan
offers more flexibility than a commercial
mortgage can, and thus can be helpful when your
investment window is very short. You might also
consider using a mortgage bridge loan to pay off
your old commercial mortgage and then roll it
into a commercial mortgage package for the new
investment property deal you are working on.
Mortgage bridge loans can be used in a variety of
ways, and you should visit your lender if a
mortgage bridge loan interests you.
As you search for viable financing options, the
most important thing to remember is that there is
a myriad of options available to you. However,
not all these options will be a good fit for your
financing needs. Be sure to do your homework and
learn about the various financial instruments
offered before rushing to decisions. If you are
patient, you will find a financial instrument,
such as a commercial mortgage, that fits your
needs and will help you on your way to success.
Adam Smith is an informational author for 10XMarketing.com To learn about a variety of
financial instruments, such as a business loan,
visit SNC Loans.
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