The Commercial Mortgage Refinancing
Commercial mortgage refinancing options are getting more difficult to determine and take to closing. It is very important to know which banks are offering the lowest rates and which ones are still funding loans and to thoroughly check these lending institutions out to make sure they engage in fair lending practices.
The rates for a commercial mortgage refinance are not as low as the conventional type mortgages such as those for private residents. The rates on a commercial mortgage refinance will be somewhere around two percent points greater than a home loan. The savings are great for a lot of people who are seeking this type of refinance package, usually because they have a lien on their property.
A lot of companies have been forced into a commercial mortgage refinance in order to have working capital. The economic situation has caused a lot of banks to freeze their company’s credit lines. Many of these businesses turn a profit regularly, but they rely on said lines of credit to finance their own working capital with which inventory is ordered, equipment purchased, pay roll and many other necessities.
Residential property values have plummeted downward and no longer generate the same income that they once did. While commercial property values are holding on, they, too, have suffered from the economic downfall. A lot of these properties fail to generate an amount equal to the income they used to. Additionally, there are far fewer borrowers in today’s market. The property owner is hurt in a couple of different ways. First, property owners tend to over leverage and are not able to get a commercial mortgage refinance. Second, this hurts a lot of home owners who are able to refinance home equity mortgage. This is because they cannot get the same amount of cash out of their properties when they procure a commercial mortgage refinance.
As the economic climate starts to recover, more money is being made available for commercial mortgage refinancing. However, the economy is not yet out of the woods and the deficit is steadily increasing. This does not bode well for business owners who are seeking immediate funding. However, it is good news for borrowers a little further down the line. It is predicted that two years from now, the economy will be back on track and lenders will open their doors wider. Not all borrowers can wait that long, but those who can will.
