Commercial Financing

[Craig Osterloh]

I intend on doing more buying in the next year. Currently I have 4 conventional mortgages. I believe they are Frannie backed. I can consolidate them all down to one, giving me three more frannie backed mortgages available.

My question: what are my options using commercial financing? Why would I want to do commercial vrs frannie? How will the rates compare?

[Lynn Z]

My credit report shows if my old mortgages went from lender to Freddie or Fannie but I didn't know (nor did I care) who wound up with them.

Small commercial lenders that work with local businesses and contractors and are not stationed on the main floor of the bank are the ones we deal with and build a relationship with. The important thing is these lenders don't care how many mortgages we have. They pull credit, ride by prospective properties, visit personally, send an appraiser etc.
They require 20% down or they will take a first mortage (sometimes a second) from other properties you own to cross collateralize the 20% down.

If you later sell a lot that's attached to the property they cross collateralized you must remember to get their permission as they will want $$$ to reduce the loan balance with. Or sometimes they'll just permit the sale without taking any of the proceeds.

I just refinanced a 20 year amor. 7.75%
loan (balloon in 5) to a 5.375% (balloon in 3) on a small loan. My credit was pulled and FICO checked but it didn't cost me anything. Most of these loans cost a .5 pt. to conclude and the paperwork is simple. Closings are so easy. I also feel it's good to keep the same real estate attorney for them to deal with on these closings.

I try to seek long term conventional financing when it fits the project...otherwise you can renew these 15 year 5 year balloons (usually).