Issues Facing The Commercial Property Refinancing

If you have been looking for commercial property refinancing for your income generating properties, you need to be aware of the process involved and the economics that may be hindering your progress. Commercial property refinancing is done by people who have an existing mortgage on an income producing property. Commercial property loans are generally extended for a much shorter term than a conventional mortgage. A commercial property loan is usually taken out for a two to ten year period, but the mortgage repayments are structured so that they do not cover the entire loan over the period. When the mortgage period comes to an end, the mortgage holder is required to pay the remaining balance. This is known as a balloon payment.

With the current economy still in the doldrums, it can be hard to secure the commercial property refinancing necessary to make the final balloon payment. Traditional lending institutions have tightened their mainsails are trying to hold course in a recessionary economy.  This has caused property owners, looking for commercial property refinancing, to struggle. One of the current economic indicators is that loans that were granted when the real estate market was booming will just not be eligible for commercial property refinancing under the new economic constraints. If you are looking for a way to ensure that your commercial property refinancing needs are met, you’re going to have to get creative.

• Approach your mortgage lender as early as possible to discuss the possibility of commercial property refinancing. You’ll get an answer quite quickly as to whether or not your loan to value ratio will make you eligible for a new loan. If this is not the case, you need to start looking at private commercial property refinancing options.
• Do not look at extending your loan. A term extension merely lengthens the problem and you’ll still have to pay the balloon debt. What you need to do is look for private and joint venture opportunities in the market. Look for a complete commercial property refinancing company that will guide you through the entire process and will ensure your loan is not only able to cover your debt, but will also allow you to use any excess cash flow for improvements and income generation.
• Start thinking outside the box. Get in touch with loan brokers and real estate mortgage brokers to advise you of the process involved in finding private commercial property refinancing options. You could be looking at a hard money loan for immediate action or some sort of interim financing to allow you to proceed with your investment plan.
• Use the law to your advantage. President Obama signed the Small Business Jobs Act into law in September 2010 and many lenders are able to offer small business operations better loans for commercial property refinancing through the SBA 504 program.

Commercial property refinancing can be found from many different sources.  As an entrepreneur, you need to look at all of them to ensure that your investments can find the wind to fill their sails.