Frequently Asked Questions
Below are answers to many of the questions poised to us on a daily basis.
Q: Are commercial "Stated Income" loans
the same as residential stated income products?
A: No. They are similar in they don't require tax returns from the
borrower, but they do require other information about the property
as well as the borrower. See our "What
you need to know about Commercial Low Doc Loans" page for more
information.
Q: What is the maximum Loan-to-Value
allowed on an investor property?
A: Typically the answer is 75% for Commercial Investment and 80% for
Multi-family on purchases, however this is based upon several
critical factors with the most critical being that the property
itself must support the loan amount based on its actual historic
income and expenses. Click on this link to our "Tools"
page for more information and tools that will help you determine
what size loan a property may support.
Additionally, LTV will be based on the LOWER OF acquisition price or
third party appraisal engaged by the lender. In most cases
"appreciated value" will not be considered until the property has
seasoned for 3-5 years under the current ownership.
Q: Are seller carry backs allowed?
A: Yes and No... in most cases a seller carry back loan
will be allowed in a second position providing 1)that the borrower
is also bringing in a minimum acceptable down payment of their own
AND 2)that the property income or the owner's business income will
adequately support the proposed combined debt.
Q: Do commercial loans all have pre-payment penalties?
A: No, however most do. This is because most lenders require a certain period of time to recover their initial acquisition cost of the loan. Many of the most attractive and competitive loan products available on the market are bundled and sold to Wall Street investors and Insurance companies. For these types of products, the investors demand some type of pre-payment penalty, usually equivalent to the initial fixed rate period for the loan.
For more information about the types of pre-payment penalties for commercial loans, click on this link to our resource page with details about all types of prepayment penalties.