Hat Is One Difference Between Fixed-Rate Mortgages And Variable-Rate Mortgages Understanding The Different Types Of Commercial Lenders

You are searching about Hat Is One Difference Between Fixed-Rate Mortgages And Variable-Rate Mortgages, today we will share with you article about Hat Is One Difference Between Fixed-Rate Mortgages And Variable-Rate Mortgages was compiled and edited by our team from many sources on the internet. Hope this article on the topic Hat Is One Difference Between Fixed-Rate Mortgages And Variable-Rate Mortgages is useful to you.

Understanding The Different Types Of Commercial Lenders

There are different types of commercial lenders that will lend you money for your projects. The type of lender you use will depend on several factors: property type, LTV, amortization, recourse, interest rates, time to close, and other factors.

Let’s take a look at the main trade lenders in the market.

Channel lenders

These CMBS (Commercial Mortgage Backed Securities) are long-term, fixed-rate financing that is usually permanent and non-recourse.

Portfolio lenders
Banks or savings and loans

They have shorter terms (3-5 years) with fixed or variable rates. They are usually for permanent and construction financing and are fully recourse.

Credit companies

They offer long-term or short-term financing with a fixed or variable interest rate. As well as permanent and construction.

Animal companies

These trade lenders are institutional quality with long-term, fixed-rate financing. Loans are usually permanent and non-recourse.

Government Sponsored Enterprise (GSE)
Fannie Mae/DUS and Freddie Mac

Fannie Mae and Freddie Mac are purchase loans from commercial lenders. Rates on 5+ multifamily units are comparable to CMBS loans, but they are properties that would not otherwise qualify.

FHA HUD 223(f)

FHA loans are backed by the US government. They offer higher LTVs and better terms and prices for 5+ residential multi-family apartments for properties that would otherwise not qualify.

Small Business Administration (SBA)

Backed by the US government, these are loans for 51%+ owner occupied properties.

Non-bank lenders

These types of loans are also known as stated income, low or no document, private and hard money. These loans are more flexible with quick closings (great if you need financing). But they also tend to have higher interest rates and participation fees or participation fees.

According to the Mortgage Bankers Association of America, about 20% of commercial mortgage loans originated in the U.S. are channeled, 20% are originated with commercial banks, 20% are originated with life insurance companies, 13% with Fannie Mae and 8% with FHA. The top commercial/multifamily builders in 2005 were:

  • Wachovia for commercial banks/thrifts and channels
  • Capmark Financial Group for Freddie Mac and FHA/Ginnie Mae
  • MetLife for Life Insurance Companies
  • Deutsche Bank Berkshire for Fannie Mae
  • TIAA-CREF for Pension Funds
  • Cohen Financial for loan companies
  • Key bank for REITS, mortgage REITs, mutual funds and other investors
  • Tremont Realty Capital, LLC for specialty finance companies

In general, there are mainly two types of commercial lenders in the market: those who hold the loan on their balance sheet (portfolio lenders) and those who sell the loan in the secondary market (conduit lenders). The secondary market is Wall Street funds, also known as Commercial Mortgage Backed Securities (CMBS).

The portfolio lender makes its profits from the spread or margin over the interest rate index. The conduit lender makes their profits based on the difference between what they can sell the bond for on Wall Street and the sum value of all the loans in the pool. This is the main reason why lenders can price a commercial mortgage loan more aggressively than a portfolio lender.

So which lender is best for you?

Well… it depends. It really depends on your project and investment strategy. So ask yourself a few questions:

  1. Is this a development project or fully developed?
  2. What are your short and long term plans for the property?
  3. What are your interest rate needs?
  4. As you build equity, will you want to refinance?

Portfolio loans have fixed rate structures, such as fully amortizing loans, with no calls or balloons, tied to a long-term, historically stable index. Portfolio loans can better meet the needs of rehabilitation or development projects.

Conduit loans are good for properties that are stable with good tenants (like NNN properties). They offer low, fixed rates with long amortization and are non-recourse. While both portfolio and conduit lenders may have a lock-in and yield maintenance period, conduit loans also have cancellation issues if the loan is refinanced. This is because if the loan is refinanced, you are withdrawing the loan from the pool of loans backing the bond, thereby changing the bond’s risk structure. As such, the borrower must pay to have another bond of similar risk, yield, duration, payment priority placed in place of his loan. Conduits also do not allow secondary financing and have high prepayment penalties. Lenders are not known for moving quickly – they usually take 4 to 6 months to close.

Generally, regardless of loan size, loan origination fees (third-party and closing costs) are the same for channel and portfolio lenders.

Because there are so many different factors when looking for a commercial lender, it really pays to have a good commercial mortgage broker on your team who can provide the know-how to find the best lender for you.

Video about Hat Is One Difference Between Fixed-Rate Mortgages And Variable-Rate Mortgages

You can see more content about Hat Is One Difference Between Fixed-Rate Mortgages And Variable-Rate Mortgages on our youtube channel: Click Here

Question about Hat Is One Difference Between Fixed-Rate Mortgages And Variable-Rate Mortgages

If you have any questions about Hat Is One Difference Between Fixed-Rate Mortgages And Variable-Rate Mortgages, please let us know, all your questions or suggestions will help us improve in the following articles!

The article Hat Is One Difference Between Fixed-Rate Mortgages And Variable-Rate Mortgages was compiled by me and my team from many sources. If you find the article Hat Is One Difference Between Fixed-Rate Mortgages And Variable-Rate Mortgages helpful to you, please support the team Like or Share!

Rate Articles Hat Is One Difference Between Fixed-Rate Mortgages And Variable-Rate Mortgages

Rate: 4-5 stars
Ratings: 3092
Views: 53219109

Search keywords Hat Is One Difference Between Fixed-Rate Mortgages And Variable-Rate Mortgages

Hat Is One Difference Between Fixed-Rate Mortgages And Variable-Rate Mortgages
way Hat Is One Difference Between Fixed-Rate Mortgages And Variable-Rate Mortgages
tutorial Hat Is One Difference Between Fixed-Rate Mortgages And Variable-Rate Mortgages
Hat Is One Difference Between Fixed-Rate Mortgages And Variable-Rate Mortgages free
#Understanding #Types #Commercial #Lenders

Source: https://ezinearticles.com/?Understanding-The-Different-Types-Of-Commercial-Lenders&id=214780

Related Posts

default-image-feature

Had Net Fixed Assets Of Last Year-End And This Year-End Balance Sheet Explained

You are searching about Had Net Fixed Assets Of Last Year-End And This Year-End, today we will share with you article about Had Net Fixed Assets Of…

default-image-feature

Flat-Panel Displays Have A Single Fixed Resolution Known As What How to Make Your Own Paper (From Your Old Jeans)

You are searching about Flat-Panel Displays Have A Single Fixed Resolution Known As What, today we will share with you article about Flat-Panel Displays Have A Single…

default-image-feature

Fixing-The-Flaws-In-Animal-Research Fixing-The-Flaws-In-Animal-Research Upon What Meat Doth This Our Caesar Feed

You are searching about Fixing-The-Flaws-In-Animal-Research Fixing-The-Flaws-In-Animal-Research, today we will share with you article about Fixing-The-Flaws-In-Animal-Research Fixing-The-Flaws-In-Animal-Research was compiled and edited by our team from many sources on…

default-image-feature

Fixing-An-Element-When-It-Reaches-The-Top-Of-The-Page How SEO Internet Marketing Companies Can Help Your Businesses Reputation Online

You are searching about Fixing-An-Element-When-It-Reaches-The-Top-Of-The-Page, today we will share with you article about Fixing-An-Element-When-It-Reaches-The-Top-Of-The-Page was compiled and edited by our team from many sources on the internet….

default-image-feature

Fixed Cost In Break-Even Analysis Refers To The Cost That Entrepreneurial Approach to Resources

You are searching about Fixed Cost In Break-Even Analysis Refers To The Cost That, today we will share with you article about Fixed Cost In Break-Even Analysis…

default-image-feature

How To Fix My Sound On My Pc Windows 8.1 My Struggle With English Continues

You are searching about How To Fix My Sound On My Pc Windows 8.1, today we will share with you article about How To Fix My Sound…