Commercial Land Loans
Commercial land loans are mended to facilitate borrowers to buy new commercial property, refinance debt and renovate the existing properties. Commercial real estate loans, or instead land loans, tend to work similarly to traditional mortgage loans to particular individuals. But there is some top difference that company personnel and business owner should understand, and Commercial Real Estate LoanPros of St. Petersburg are there for your concern.
The loan-to-value ratio is a method that lenders use to establish how much they can loan. To be more precise, they calculate by dividing the amount by the property’s value. Land purchasers can qualify for a conventional loan with a loan-to-value at a high rate of 97%. And in case you select government-insured loans, you may end up getting 100% financing.
In commercial land loans, lenders usually demand a loan-to-value ratio of 75% – 80%, according to the National Association of Realtors. This means that you either buy an undervalued land or property or have a 20% -25% deposit before approaching a lender if they apply a loan-to-value ratio to establish a loan amount.
Non-Recourse Loans Vs. Personal Guarantee
If you get a real estate loan or a mortgage on the land, the lender will consider the commercial property as collateral for the loan. On some occasions, it may need a personal guarantee. It may depend on the period that you have prevailed in the business. Your venture might not be having the record of financial track needed by the lender to qualify for the commercial land loans. In this situation, the lender may require the owners or principals to guarantee the loan.
In another situation, the lender may not need a personal guarantee. But on the contrary, use the property itself as the only way of recovering the loan funds. This is especially if you are unable to keep up with the mortgage payments. The method is sometimes referred to as a non-recourse loan in that the lender cannot get additional money. This is specified when the commercial property does not fully cover the loan
How To Obtain The Loan
Depending on the qualification and needs of your business, there are certainly five primary types of commercial land loans in real estate form. You obtain the loans from Commercial Real Estate LoanPros of St. Petersburg and achieve your goals.
A permanent loan is usually the primary loan on a commercial property that resembles a traditional mortgage loan. You can obtain a permanent loan from commercial lenders, but they do not offer short-term loans.
SBA real estate loans are two loan programs whereby you can obtain commercial financing. They are SBA 7(a) and SBA 504 loans. The SBA 7(a) loan program is more general, and borrowers have a lot of elasticity in using the funds. The down payment requirements start from 10%; however, they can be much higher. With the SBA 504 Loan program, small investors must utilize the finance. Therefore you must use the funds to buy the land or the real estate, renovate an existing property, or refinance a construction plan. The other types of loans are bridge loans, business loan builders, owner financing, and hard money loans.
There are so many areas or regions where we offer these services with most of them being cities.
However, if you need any of these services, you need to contact us. The list below comprises the areas where we offer these services.