Loan based on LIBOR rate plus points

[James Leos]

Hi BP,

I'm doing a cash out refi from a seller carried property I purchased in 2012. That same seller is interested in financing a new property for me, but with different terms. This is what his initial feedback was: rate will be about 4 points on top of the adjustable rate LOC I have (which is based on LIBOR or the equivalent U.S. benchmark) also the rate will be adjustable yearly on its anniversary...how can I convert what that rate is today, I understand it will change annually.

Thanks!

[Jon Holdman]

@James Leos you wrote:

So, no, I don't think that translates into LIBOR + 4%. Its his LOC rate + "about" 4%. That's probably LIBOR + some percentage + "about" 4%. If you're going to agree to do it as some percentage over his LOC then I would want a copy of the LOC's promissory note.

@Account Closed  the specific benchmark should be stated in the promissory note.  I don't recall every having had a LIBOR based loan.  Not sure which one is commonly used.