Five Useful Tips When Applying for a Multifamily Loan
Multifamily financing is a mortgage intended for someone who wants to buy or refinance smaller multifamily properties having no less than four units and big apartment buildings with at least five units. Multifamily loans are a wonderful option for all kinds of real estate investors and professionals, old hands and novices alike. Rates are usually around 4.5 percent to 12 percent and terms usually go up to 35 years.
If you’re applying for permanent multifamily financing for rental units, here are five useful tips that can help you out:
1. Apply as soon as possible.
Any knowledgeable loan officer and underwriter will always expedite the process, beginning with the inquiry up to the funding. It isn’t the case all the time, but usually, there are problems along the way that lead to delays. For instance, the underwriter may have backlogs to clear or the borrower may have incomplete documentation. Hence, it always makes sense to begin the process as early as possible.
2. You have many options.
They require proof that the borrower will still have income aside from the money that he is expected to pay for the sum he owes. Low debt-service coverage ratio requirements start at 1.25 and go up from there. To know your low debt-service coverage ratio, simply divide your NOI (net operating income) by the annual debt service obligation.