Commercial loan options

[Jarod B.]

Purchasing a package of SF homes using a commercial loan. Options include 15 yr Amortization 7/1 ARM 4.75% 10/1 ARM 5.25% 15 fixed 6.5 % Considering the current lending environment, which would be the better option? Just curious what others opinions may be that have more experience with this type of lending? Thank you for your input

[Steve L.]

What is your ownership horizon on the properties?  

I think the 15 year option is not good.  Rates would need to be over 8% years 8-15 for that options to be better than the 7/1.  

For the 10 year to make sense rates would need to be 6.5% or so for years 8, 9, 10.  

The chances of you refinancing, paying off some is pretty high in the next 7 years.

I would likely pick the 7/1.

@Ash Patel I'd be curious to see what terms you get for loans you get for stabilized SFHs? Are you talking about Fannie or Freddie style products or commercial SFH packages.

Pretty common for me to pay 5% for a 10 year fixed. 70% LTV on a package of stabilized houses. The banks I deal with give me 25-30 year amortization though.