Five Useful Tips When Applying for a Multifamily Loan
Multifamily financing is a loan designed for purchasing or refinancing large commercial buildings that have no lower than five units or smaller buildings that have two units or more. Multifamily financing is a great tool for all real estate investors and professionals, whether old-timers or neophytes. Rates are often in the 4.5 percent to 12 percent range and terms up to 35 years.
If you’re in search of a permanent multifamily loan for rental units, below are five handy tips you should consider:
1. Apply as early as you can.
Any good loan officer and underwriting team will do what they can to fast-track the process, starting from the inquiry all the way to actual funding. It isn’t always true, but sometimes there are issues that cause delays. For example, underwriter backlogs or incomplete information from the borrower. Hence, it always makes sense to begin the process as early as possible.
2. There are several options.
We will not thoroughly explain here the different alternatives available for multifamily mortgages. The lowest requirement for low debt-service coverage ratio is1.25 and may increase from there. To know your low debt-service coverage ratio, simply divide your NOI (net operating income) by the annual debt service obligation.Read More →