What are the most common terms of a commercial real estate bridge loan?
Answer:A commercial real estate bridge loan will usually have 80 percent loan-to-cost, 70 percent loan-to-value ratios, and often a portion of the loan will be held back until additional value has been achieved within the bridge loan project - such as reaching specific construction phase, or vacancy level, or certain improvements are finished.
A commercial real estate bridge loan will be extended usually for periods ranging from 1 to 3 years, and extensions are usually possible if need is demonstrated.
Typically, commercial real estate bridge loans will have rates based on a prime rate plus 2 or 3% margin; or on LIBOR with 3 to 4.5% margin. Prepayment penalties do not apply with a commercial real estate bridge loan and contractors are expected to have high level of expertise with commercial real estate properties.
Commercial real estate bridge loan closing costs will be between $5000 and $10,000 for loans under $2,000,000; and could reach $20,000 and more for loans above $2,000,000. Amortization offered is often interest-only.
Our advice: Be sure to ask your lender about FHA loans. FHA loans have very competitive interest rates because the loans are insured by the US Federal Government. Even if you have had serious credit problems, such as bankruptcy, it is easier to qualify for an FHA loan than a conventional loan. Also, taking an FIXED rate loan while the interest rates are still low is a smart idea. Check your eligibility here:
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Common misspellings: mortage and morgage