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04-08-2023, 01:27 PM #1
Merchant had a 1st and 2nd commercial mortgage and needed $500,000 cash out....
Hard Money NoDoc (no income documentation) Cash Out Refi:
Loan approval 65% LTV on $6M valuation
1st mortgage $1,800,000
2nd mortgage $450,000
Cash out $500,000
New loan amount: $2,750,000
2% lender fee $55,000
3% broker fee $82,500
Total loan amount: $2,887,500
1% to buy down prepayment penalty to one year:
add $28,875.00 to loan amount
New loan amount with prepayment penalty: $2,916,375
12.99% annual interest rate, interest only payment:
$31,569.76 a month
However, lender said once your file is in underwriting, we can request a 1 year prepayment penalty with 6 months payments built into the loan and eliminate the 1% fee.
That would be 6 X $31,257.19 = $187,543.14 added and put in escrow.
Yes that would be deducted from the loan amount.
However, remember, if we do that you will have NO PAYMENTS ON THE LOAN FOR 6 MONTHS.
We can increase the loan amount to cover that.
So you will still have a new cash out amount of $500,000
Loan amount with fees: $2,887,500
6 mo. payments to eliminate 1% prepayment 187,543
Loan amount: $3,075,043
New loan interest only payment: $33,287 a month
Here is the original loan parameter:
12.99% annual Interest Only
10/20 - fixed for 10 yrs then 20 year Amortization
2% Origination Fee to lender
1% to buy down prepay to 1 year.
3% Broker fee
Appraisal to be ordered by Lender
Reduced prepay cost....
Possibly 6 mos guaranteed interest.
Would have to be decided in underwriting.
Need tri merge credit report and real estate loan application.
A real estate loan application is form 1003.
Here are general hard money options:
Bridge loan - 24 months Interest Only - runs around 11%. Can have no prepayment penalty up to 6 months to a year depending on the lender.
10 year interest only, amortized 20 after. This program has a bit of a lower rate and is good for rental properties as it offers the lowest payment. However, it does have a 5.4.3.2.1 prepayment penalty. Thats 5% first year, 4% second year, etc. You can buy down the prepay to 3 years for 1% cost. To 1 year at a 5% cost. AGain there are variations.
30 year fixed.....this is for long term fixed and the rate is the lowest of the two above. It also has the 5,4,3,2,1 prepayment penalty.Last edited by Olderguy; 04-13-2023 at 11:30 AM.
Steve Benjamin
Professional Business Loans
522 Contessa
Irvine, CA 92620
steveprobiz@gmail.com
https://probizloans.net/
Broker, Underwriter, general business loan expert
949.228.1050
@ 24 hour funding working capital loans
@ Term loans from 3 years to 10 years at 9.5% and up
@ Equipment financing up to 7 years
@ Property loans - Hard Money and traditional - Primary, Investment, commercial, land, fix and flip, construction.
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