Christian Commercial Loan Refinancing
Christian commercial loan refinancing, just like residential refinancing, offers a variety of benefits. These include lowering the interest rate, cashing in on equity, and consolidating debt. It is important to weigh the pros and cons to make sure the outcome will be better in the long run before making the commitment to refinance. The programs offered are much the same as the programs available to the homeowner. Refinancers may choose from a fixed-rate in terms of five years, ten years, 15 years, and 20 years. A fixed-rate loan would be the most economical in the long run given the current interest rates, which are the lowest they have been in 30 years.
Other options for commercial loan refinancing include ARM loans, or Adjustable Rate Loans, in which the borrower benefits if the interest rate falls at the time of the adjustment. Likewise, if interest rates rise, the borrower will lose out. Adjustable Rate Loans are available with adjustment dates of as often as once monthly to every five years. If considering an ARM, the longer the adjustment period, the less financial risk.
Balloon loans are yet another option when considering commercial loan refinancing. A balloon mortgage is a type of fixed-rate mortgage loan. The principal and interest are amortized over a longer period, usually 30 years, than the actual term of the loan. For example, a 5-year balloon mortgage has a term of 5 years, but the payments are calculated as if the term of the loan were 30 years. When choosing a balloon loan, at the end of the balloon period, the outstanding balance must be paid off with a lump sum or it must be refinanced for the remaining 25 years.
Commercial loan refinancing can incur a great deal of fees and closing costs just as if it were a new loan. Do research and look for lenders who offer no "junk" fees and no hidden closing costs. A very important element is the appraisal. Keep in mind that it can take between six to eight weeks, but it is said that good things come to those who wait. Remember, in the Bible, we are reminded "But they that wait on the Lord shall renew their strength..." (Isaiah 40:31). All commercial properties are unique and unlike a residential property, a commercial property is not usually common to the surrounding area; therefore a very thorough appraisal is key. Commercial appraisal costs usually begin at $1200 while residential appraisals are commonly between $275-$325. It is crucial to have a mortgage company with a high level of experience in the appraisal process as well as the lending process.
Commercial refinancing is a process that requires some thought and planning because there is much documentation and consideration involved. That being said, there are many options when a business owner decides that it is viable and financially suitable for his situation. Whatever commercial financing option a business owner is looking for, there probably is a lender that will work with him.
Reworking existing debt with a new loan that provides more favorable loan terms is what Commercial refinancing is all about. The conditions of this arrangement will depend upon the property type and value, as well as the cash flow the property generates. However, most owners find that this arrangement is a good financial move right now because of the lower interest rates that are available. Interest rates are posted daily, so anyone easily can check and compare the current interest rates with your loan interest rate before pursuing this option.
No matter the type of property a person owns, there is probably commercial refinancing available for it. It can be done on such properties as office and retail, warehouse operations, restaurants, multi-family dwellings and more. There is great flexibility in the types of properties that can be refinanced. However, this option will be dependant on a businesses' financial situation. Therefore, if the businesses' credit has suffered from late payments or a past bankruptcy, the conditions will probably not be as favorable as for a business owner with good credit.
Before approaching a financial institution about this arrangement, have a good understanding about how much the process will cost, as well as having prepared the documentation a person will need to proceed. This method is not a quick and easy process that will effortlessly change the monthly payments and interest rates. There are several other costs associated with the arrangement, such as examining the businesses' credit history, inspections and appraisals, legal fees and loan application fees. In addition to the fees, a business owner will need to provide other financial documentation. The institution a business owner chooses to work with will give him a list of what he needs before applying. Financial arrangements require good will on the part of both parties. Good will in service to God is mentioned in Scripture: "With good will doing service, as to the Lord, and not to men." (Ephesians 6:7)
When deciding whether commercial refinancing is a viable option, a person will need to figure out how much the business will be saving every month with the new mortgage payment. To aid in this, there are financial tools online, including calculators that can assist in estimating if this arrangement is something the business owner should pursue. Chances are if the business is in good financial shape, the business owner may benefit from the low interest rates available through this option.
Christian Refinance Commercial PropertyRefinance commercial property as a means to reduce high interest rates or a longer term loan that are the direct cause of exorbitant amounts of interest being paid. One may also decide to obtain cash from the equity the property has built up. It is very important that that capital be reinvested in other commercial property or the interest paid on the new portion will not be tax deductible. If tracked to non-investment purchases, the cash-out portion is considered a consumer debt. Therefore the purpose defeats the tax deductible status of the entire loan.
There are many different commercial properties that can be refinanced. With good research and knowledge about geographic regulations, there should be no problem in finding out this information. It is important to weigh all options before making any financial decision. A trusted Christian financial advisor is a great first step in the right direction. Knowing what is desired for the end result is also important and should be shared with this advisor.
The type of loan should be carefully considered before committing to a large amount for a lengthy repayment. Consider the options of fixed rate loans and variable interest rate loans when preparing to refinance commercial property. Be sure to know if the variable rate loan has a cap and how often the rate is expected to vary. This will be determined by the investment index the rate is associated with - Treasury bills, LIBOR (London Interbank Offering Rate), and Certificate of Deposit rates tend to be volatile, while other indices change more slowly. Attempt to refinance with a lender who is willing to clarify their variable rates source and are able to help select one that varies with less volatility.
Another term of the loan that should be carefully observed is if it has a "due on sale" clause. This clause prevents the property from being sold to another party without the lender's approval. It is important when choosing to refinance commercial property to pay attention to the details of the mortgage terms. One must be "wise as serpents, but harmless doves" (Matthew 10:16). The "wolves" of many finance companies provide their services, but for a price to their advantage. It is expedient for the person who wishes to refinance commercial property to do their homework and know the terms as well as the options before approaching a lender with valuable commercial property at stake.
Refinancing a real estate investment offers a consumer the opportunity to receive a lower rate of interest on payments toward a home, building, or other property. This can be one of the easiest or most tedious processes for a homeowner to pursue. Either way, the outcome will be worth the effort because money will be saved. Taking the time to refinance does not have to be a big ordeal but it will, no doubt, produce big results for the individual.
The purpose of refinancing is to lower the interest rate in order to lower monthly payments and, on the whole, the entire loan. This allows homeowners or investors more freedom to either make lower minimum monthly payments or continue to make the same payments while taking years off the time they would have had to pay. When paying an existing mortgage for a decade or more, a few years can mean a lot. Refinancing a real estate investment can never be a bad thing. In fact, it is a financial strategy that proves to be very smart.
When looking to go through the process of refinancing, a person must take into consideration the lender they would like to refinance with. Many times the homeowner will decide to go with the existing lender, perhaps the bank. By going with an existing lender, the homeowner will be able to maintain relationships that already exist, providing the essential element of trust. Some homeowners may be uneasy about refinancing a real estate investment at first. Like anyone looking to take a loan, the consumer must be able to trust the lender. In this situation, a consumer would hope the lender would be able to find the lowest percentage rate and make a seamless transition. However, this is not always the case.
In some cases, the existing Christian lender can not provide the lowest interest rate because of a number of factors. When this occurs, the homeowner may wish to explore other lenders. If a lender is found with a lower interest rate, the application process may start all over again. Since the individual does not have an existing loan with this lender, all of the information about finances, credit history and personal information will need to be provided as well as another application and perhaps application fees. In the end, if the interest rate is much lower than the other estimates, it may be worth the trouble to continue to pursue refinancing a real estate investment. Bottom line, people must remember to live within their means. God has given His people the ability to make money and Christians should learn to spend and save wisely. "But thou shalt remember the LORD thy God: for it is he that giveth thee power to get wealth, that he may establish his covenant which he swear unto thy fathers, as it is this day." (Deuteronomy 8:18)