Does each state have a set commercial loan rate?

Question

I am just speaking with a lender and he mentioned to me that the commercial rates below $500 000 (and above i guess) are determined by that states 'Housing finance commission' or Agency etc.

Is this the same for each state?

If so, how do I find each states rates?

What are your rates in your state?

thanks

Account Closed · Answer

Johnathan, there are several banks in our area that provide commercial loans.  I would contact several before deciding on one.

Rates can vary by type of loan product, lender and the existing loans that a lender already has.  There is a relatively new bank in our area that you might want to check out.  Umpqua that is new to Washington and has funds to lend for residential and commercial projects.

Several banks in the area offer conventional, FHA and SBA loans.  You may want to sit down with some that can explain the advantages and use of the various loan products out there.

Jonathan H. · Answer

Well, the property I am looking at is an 8 unit property.
Since I cannot get a loan where I would reside in the unit, the mortgage company just said they would transfer me to another the commercial loan dept.

Account Closed · Answer

Perhaps the confusion here is more of what kind of commercial loan are you looking at.  The Washington State Housing Finance Committee is a governmental agency that assists in implementing federal programs in our state.

If you are looking to develop property that is eligible for the Low Income Tax Credit you will need to deal with this agency.  Also funding for several federal home buyer programs must go through this agency.

http://wshfc.org/

Commercial loans rates are not set by this agency.

Bill Gulley · Answer

You can ask any time, probably best at your first meeting with any lender. Does it make a difference, only if you can find out who is really funding the loan and if you can borrow from them, and many time you can't anyway, so it makes no difference really. It's nice to have a local servicer, so you can do a face to face if there is ever an issue, but today, it's really not necessary, especially on a commercial loan.
Just IMO.

Jonathan H. · Answer

Thanks for the information guys.

If I understand correctly, its possible that I do not have the right person for the job at hand, so to ask more questions.

I have already contacted a couple more banks and lenders in AK but have not spoken to anyone yet. I should in the next couple of hours now.

I do have a question Financexaminer, you said I should ask:
 "if they are going to sell the loan? 
Will they fund the loan? 
Will they service the loan?"

When I do ask these questions, what should I want them to answer? How would this effect me?

Bill Gulley · Answer

Darryl has a good point, but you can ask and they might say, we are the lender! They might be, depends on the closing. They can close in their name and sell the paper immediately at settlement using those funds! (Sounds funny that when investors buy, they can't use the end buyer's money, but lenders can).

So, ask if they are going to sell the loan?
Will they fund the loan?
Will they service the loan?

None of these questions are required to be answered in commercial lending, but as mentioned, there is no reason not to tell you and they should not be keeping you in the dark.

If they are mortgage brokers, they may be required under their license to inform you of the questions posed above, depends on your state.

Darryl Dahlen · Answer

Looking at their website it is evident to me they are a brokers, not a lender.

Not saying this a bad thing, but my first reaction is to wonder if this company understands commercial lending. Perhaps they do, but often times, a residential broker will try their hand at commercial lending in an effort to make money when they would really be better served by passing on the deal.

To answer your question, hard money is private money offered at terms usually much higher then what you can obtain through conventional means. If you don't know which you are dealing with you need to ask or replace who you are working with since you are being kept in the dark far more then you should be.

If you have any questions, please do no hesitate to email me.

Bill Gulley · Answer

Hi, you said commercial, which is another lending area. It is not governed by any housing agency as to loan terms or rates. In fact, I don't think there are any usuary rates applicable to commercial loans since usury rates are a product of consumer laws.

Commercial lending is assumed to be made only to business people, therefore they are considered to be rather sophisticated concerning their finances, they are not consumers. You are expected to use sound business judgment and negoiate financing that is acceptableto you and your business needs.

Many hard money lenders use bank financing, and certainly other sources,  they may borrow at 7 or 8% and loan it out at 14%, you would never know where the money comes from.

You will find such financing addressed in the Uniform Commercial Code, not residential lending regulations or related consumer laws.

If a mortgage company makes commercial loans, I would suspect they are borrowing the funds and may well be from a source you could find yourself. You might go to the courthouse and see some of the transactions that might close in their name, then look for assignments of the note and deed of trust to another named holding company or bank. Good luck

Jonathan H. · Answer

Hi Darryl,

The lender works with AlaskaUSA mortgage.

This is gonna be such a newbie question but...
How can I tell the difference between a hard-money lender or the bank?
Basically if they work for a bank or not?

thanks

Darryl Dahlen · Answer

This is the first I've heard of this. In every small balance case I've dealt with, the lender determined the rate, and the rate was based off the numbers, not the state the loan was in.

I can take the same loan to two different lenders and get two vastly different quotes so there is no way the state is dictating what they can charge.

Now, there may be state laws that prohibit how much a lender can charge, but those laws will not effect most conventional lenders since they tend to lend on a margin based off the prime rate.

Is your lender a hard money lender? Are they a bank?

Does each state have a set commercial loan rate?

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