Bank loan offer. How do I read this??

[Gary Myers]

Background: I own 7 properties, total 24 doors. Current loans are a jumble of 4.25-5%, 5-10 years balloons. Total outstanding mortgage balances: $498,000

I approached my lender (Local credit union) looking to refinance all the mortgages into one large one and create a line of credit with the equity in the properties so that I have money avail for "Cash" offers.

I'm looking for red flags, points for renegotiation, and any advice would be appreciated.

Here is the unofficial offer from my bank:

Loan 1:

Loan amount: up to $525,000 including all closing costs not to exceed 75% of appraised value

Rate: 4.35% fixed for 60 months, then to adjust to 350 b.p. over the 5 year UST Constant with a floor of 5.38% & no ceiling.

Term: 120 months

Amortization: 240 months

Origination: 0.5%

Loan 2:

Business Line of Credit: $100,000 not to exceed 75% of appraised value

Term 24 months

Rate 5.50% fixed

I'm not a financial guy, but I'm not really happy with: no ceiling, 0.5% origination, and 24 month term on the second loan.

The biggest problem is that they are going by purchase price. I was hoping to go by 75% of current appraised value and was hoping for a second loan closer to $225,000.

Can anyone comment on if this is a reasonable offer? 

Which points can I, and should I negotiate on?

Thank you for any help and advice

Gary Myers

Tampa FL