Important Terms & Info
There are 14 different loan programs to choose from. The following are general terms.
Property Type - Multifamily with 5 or more units
Ineligible Property - No rehab, turnarounds or handyman specials
Transaction - Cash out
Ownership - Most entities, corporation, LLC, LLP or individuals
Credit - borrower must have a FICO score of 680 or better
Loan Amount - $500,000 to $50,000,000
Loan-to-Value - Refinance: Cash out 75% LTV
Second Mortgage - Second mortgages not allowed
Amortization & Terms - Up to 30 years amortized. Initial fixed for a period of 3 years, 5 years, 7 years, 10 years, 15 years and 30 years
Interest - Call for quote
Rate Lock - Depends on lean program selected
Escrow - Depends on loan program selected
Recourse - Depends on loan program selected
Seasoning - Generally do not allow refinancing during the first 6 months of ownership
Appraisal - The appraiser must be state-licensed
Survey - Survey required if not otherwise satisfactory to Title Company
Inspection - Depends on loan program selected
Environmental - Depends on loan program selected
Title Insurance - ALTA lender's title insurance satisfactory to lender
Termite - Depends on loan program selected
Other Cost - The borrower will be responsible for paying all costs associated with the transaction including, but not limited to: appraisal, survey, title insurance, credit reports, property condition inspection, flood insurance and legal fees if required.
DSCR (Debt Service Coverage Ratio) - 1.25:1. Determined by dividing actual NOI by Debt Service (PI). This is the minimum acceptable. Some loans will require higher DSCR.
NOI (Net Operating Income) - This is the net profit after all property related expenses have ben paid excluding the debt service payment (mortgage PI payment).
Vacancy - Market
Management - Use greater of, market or 5% of EGI as a management fee expense for underwriting
Replacement Reserves - As a minimum use $150-$200 per unit for any replacement reserve for underwriting. (Can be adjusted downward if operating statements show repairs and maintenance items)
Assumable - Qualifying assumptions with a 1% fee
Pre-payent Penalty - Depends on loan program selected