Frequently Asked Questions |
What is a DCR?
A: DCR or Debt-Coverage-Ratio is a calculation using the income property's annual Net Operating income or NOI and then divided by the loan's annual debt service to formulate a ratio.
Most lenders require a minimum DCR and that minimum varies among property types. For example if a property has a NOI of $25,000 and the loan has a debt service of $20,000 the DCR would be 1.25.
Ex. 25,000 / 20,000= 1.25 DCR = 1.25
Q: How do I determine a Net Operating Income
for my commercial property?
A: This is done by calculating the following
income and expenses of the property.
Potential Gross Income:
Plus: Other Income
Less: Vacancy
Equals: Effective Gross Income
Less: Real Estate Taxes Operating Expenses
Equals: Net Operating Income
Q: Are you a full recourse lender and what does that mean?
A: Yes... and what that means is that every
loan must have a personal guarantor.
Q: What's the deal with environmental? Do I need an environmental inspection report?
A: We will handle this for you! Please fill
out our environmental questionnaire.
Q: What is your turnaround time for getting
a loan funded?
A: We typically fund loans within 30 to 45
days. Of course getting loans funded quickly
involves a combined effort with both borrower
and lender doing their parts effectively
and efficiently.
Q: Are loans assumable?
A: Yes, If the new borrower qualifies.
TERMS
* 6 Month Adjustable:
This loan adjusts every 6 months by adding
the loan's margin to the Wall Street Prime
at the time of closing.
* 2 Year Fixed:
The interest rate at closing stays fixed for 2
years and then adjusts every 6 months by
adding the margin to Prime at each adjustment.
* 3 Year Fixed:
The interest rate at closing stays fixed for 3 years
and then adjusts every 6 months by adding the
margin to Prime at each adjustment.
* 5 Year Fixed:
The interest rate at closing Stays fixed for
5 years and then adjusts every 6 months by
adding the margin to Prime at adjustment.
* 7 Year Fixed:
The interest rate at closing stays fixed for
7 years and then adjusts every 6 months
by adding the margin to Prime at each
adjustment.
* Declining Fixed Rate:
Lenders took the conventional Fixed Rate
with 15, 20 or 30 year terms and added a
unique feature. Although the interest is
fixed for the life of the loan, the rate
will drop by .500% every 5 years as long
as the borrower maintains an excellent payment
history. The loan must be current at the time
of adjustment.
* Interest Only:
Although this loan type is not listed on
our Matrix, we do offer it to those borrowers
who are interested. The loan is amortized
over 30 years to make the payments
reasonable but the borrower makes interest
only payments for the first 3 years, after
which he pays principal and interest on the
remaining balance. At the end of a 10 year
period, the balance is due and must be paid
off or refinanced. It is available only to
A credit borrowers.
* Loan-to-Value:
Loans up to 85% of property value.
* Prepayment Fees:
5% for 5 years for all programs.
* Guarantee:
Personal guarantees are mandatory for all
eligibe borrowers including individuals,
cooperations, partnerships, LPs, LLCs and
certain trusts.
* Escrows:
Tax escrows are required. Insurance escrows
may be required.
Fill out custom quote
Gather documents
* Two years tax returns-Business and Personal (W2s)
* Proof of assets (if any)
* Recent pay stub if work outside the property
* Proof of property insurance
* Mortgage statement
* Fax or email to 1st HomeState
P: (866) 788-0515
F: (407) 772-0584
info@1sthomestate.com