Commercial Mortgage Interest Rates

2007-05-02 10:04:19

( Financial )



The basic difference between residential and commercial mortgage is that in the former residential property is used whereas in the latter residential property isn’t used. Any other business property or commercial building is used for securing the payment. Commercial Mortgage interest rates is basically carried out by the businesses instead of the individual borrowers. The borrower can only seize the collateral property of the creditor but has no claim for any remaining deficiency. Many commercial property owners find a need to refinance their property when they find their balloon payments are due, as the short term loans are 25 years amortized within 2 to 5 years.

The basic application of commercial mortgage interest rates are used for acquisition of lands or properties or refinancing an existing debt. Commercial Mortgage Rates are higher than the residential property mortgage. The most commonly used mortgage rate is fixed i.e. fixed throughout the term. These variable mortgage rates are entirely based on treasuries and swaps and are measured through indexes such as LIBOR or PRIME. Second type of Mortgage rate is subsequently followed by the first one hence carries more interest rates.

Commercial Mortgage Calculators generates an approximation of the payment a series of installments or transfers for your current mortgage. You can quickly get in touch with your principal and interest with these calculators.

There are agencies and firms specially qualified for providing you the lowest of the commercial mortgage interest rates that allow you to take the maximum advantage of the property in stake. Basically the commercial mortgage rate interest rates are found within the proximities of United States of America. In USA, government sponsored enterprises Fannie Mae and Freddie Mac stamps the bonds with a guarantee assuring of timely payment. They also lend their own money thereafter securitizing the bonds simply leaving the decision to the banks to take the decision of handling of servicing. This process of lending led to a new name of these agencies also known as Leading Agency.

Recent technologies have led to a new marketing program known as Commercial Mortgage Leads where this contain a well organized list of qualified prospective clients.

There are some underwriting standards involved with Commercial Mortgage interests rates on loans. They are planned to be underwritten entirely on the basis of attributes of the property regardless of the attributes of the creditor. This makes it a necessity that the property should be owned by a single asset entity such as LLC created specially for this purpose. In the case of the residential mortgage loans when the creditor has some problem in selling the property then them usually require a minimum debt service ranging from 1.2:1 to 1.35:1. (This ratio depicts net cash flow before debt service over the debt service. Here, the basic difference between the residential and commercial mortgage is that the former looks at the total profitability of a borrower's position.


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