How to Refinance a Commercial Mortgage Loan

How to Refinance a Commercial Mortgage Loan

Nov 28, 2017 (0) comment

Refinancing a commercial mortgage loan can be an important step if you’re a business owner or entrepreneur looking to grow your business or company. Refinancing can help you pay off your debts by having a lower interest rate and reduced loan payments. Refinancing can also be a way to unlock equity if it brings in additional financing. Commercial mortgage loan borrowers should constantly keep in touch with mortgage lenders and research about other financial providers to learn the best refinancing options.

1. Do the Math

The main purpose of refinancing is to bring down costs. Find out what the interest rate will be, the closing costs, the loan term, and the cost of the refinanced commercial mortgage loan. Determine the amount of time you have to spend on refinancing because the process may take a couple of weeks or months. If you want to be sure that refinancing is valuable to your business finances, use an online debt calculator or have your financial team come up with a comparison of your current payments versus your refinanced payments. This will help you measure the benefits of refinancing.

2. Ask the Right Questions

Ask the basic questions when you apply for any loan:

  • How much time will you need to pay back the mortgage loan?
  • What happens if you want to prepay or need to pay late?
  • How does the overall effective annual interest rate compare with other options?

3. Examine Your Current Commercial Mortgage Loan

Assess your loan payment, the rate of interest you’re paying, and the number of years left on your loan. When you’re refinancing, include all commercial mortgage loans that you have. Loan consolidation is a good reason to refinance.

4. Consider Your Reasons for Refinancing

Look for a refinance loan that will provide you with money to pay for repairs or make a major purchase.
If your loan is an adjustable rate mortgage, refinance it to a fixed rate mortgage. Do not refinance to another prime based loan.
If you do not have enough cash to make a balloon payment which is due, you will need to refinance to avoid making a balloon payment at the end of your commercial mortgage loan term.

5. Choosing Your Lender

While choosing a lender, consider the quality and the reputation of the lender. Talk to lenders and compare commercial mortgage loans. Consider loan term and interest rates.
Consider fees and costs associated with refinancing like an application fee, a lender’s fee, an appraisal fee, and a prepayment penalty.

6. Prepare Paperwork Required by Your Lender

For refinancing, you’ll need tax returns, audits, company financials, and your business plan.
The lender will review your business credit. Be prepared to explain the circumstances for late payments or if you have judgments pending against you. You’ll also need to provide your plan for rectifying any negative credit or financial situations.

7. Get an Appraisal

If the value of your property has decreased since your original loan, you might need additional equity to qualify for a refinance.

8. Sign the New Commercial Mortgage Loan Documents

Signing the new commercial mortgage loan documents completes the process of refinancing a commercial mortgage loan.
If you’re looking to refinance your commercial mortgage loan, Drew Mortgage Associates, Inc. can help! Drew Mortgage Associates, Inc. is a commercial mortgage lender in MA that helps entrepreneurs and business owners to refinance their commercial mortgage loans at lower interest rate. Our trained home loan officers will help you identify refinance options that best suit your financial goals. Drew Mortgage Associates, Inc. is the most preferred commercial mortgage lender in MA. Contact us today for refinancing a commercial mortgage loan!


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