Investing in Income Properties by Rosen Kenneth D.;

Author:Rosen, Kenneth D.; [Rosen, Kenneth D.]
Language: eng
Format: epub
ISBN: 9781119390589
Publisher: John Wiley & Sons, Incorporated
Published: 2017-02-13T10:00:00+00:00

Like other kinds of real estate transactions, your loan request will be marked by back-and-forth negotiations with your bank. You should start by asking for what ideally suits your needs, knowing in the back of your mind that you probably won't get all the terms you request. Here is a template for what you should seek:

Amount of loan: Eighty percent of the purchase price.

Terms: Thirty-year amortization with a 10-year term.

Interest rate: The rate of interest shall be one-half percent over the prime rate fixed for 10 years.

Prepayment penalty: None.

Assumption clause: Permissible to future buyers at a 1 percent transfer fee (which is hard to get).

Points: One-half point.

Future advance clause: Such a clause in the mortgage permits you to increase the loan in the future without having to renegotiate a new loan. This is beneficial to you because you will pay only modest closing costs on the new funds generated. (The bank has already charged you points and closing costs on the existing loan.) If you refinance with another bank, however, you will have to pay points and closing costs on the entire new loan obtained.

Secondary financing: To be permissible. This simply means that you can place a second mortgage on the property.

Banks attorney's fee and appraiser's fee: Mutually agreed beforehand; it normally is your responsibility to pay these fees.

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