Anybody used a “guidance line of credit”?

[Account Closed]

So, new to this whole financing thing. We’ve only used conventional mortgages up to this point. Got this from a local bank here in OKC and looking for thoughts if this is good or bad deal.

TIA

Here’s what I would propose: we set up what we commonly call a “guidance line of credit”, which is just a pre-approved amount and terms that we commit to and make available for an initial period of 12 months. Proposed terms (subject to credit approval) would be as follows:

$500,000 limit to purchase rental properties, with each acquisition financed on a separate note

15% down payment required on each acquisition, Loan-to-Value not to exceed 80% of appraisal

20 year amortizations with 5-year fixed rate of Prime + 1.25% at the time of closing (4.5% currently)

½% origination fee on each acquisition, plus actual out-of-pocket costs such as appraisals, title insurance, etc.

[Kyle Altenau]

If anything, I'd try and push amortization to 25 years. If you're looking to leverage and grow as much as possible, that 5 year difference could end up making a huge difference. If not, maybe they can do a little bit better on rate.