How to Nail That Multifamily Loan
Multifamily financing is a loan designed for purchasing or refinancing large commercial buildings that have no lower than five units or smaller buildings that have two units or more. Multifamily loans are a good option for both veteran and newbie real estate investors and professionals. Terms may extend up to 35 years and rates between 4.5 percent and 12 percent.
If you’re searching for permanent multifamily financing for a rental units, these are five helpful tips you can keep in mind:
1. Apply early.
Any decent loan officer and underwriter who know what they’re doing will always find ways to speed up the process, from the loan inquiry all the way to funding. It isn’t always like that, but there are occasional humps that tend to bring delays. For example, underwriter backlogs or incomplete information from the borrower. Hence, it always makes sense to begin the process as early as possible.
2. There are lots of options.
We’re not going for a thorough discussion of the different multifamily mortgage alternatives available. Low debt-service coverage ratio requirements start at 1.25 and go up from there. To get your low debt-service coverage ratio, just divide your NOI (net operating income) by the annual debt service obligation.