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CRE FINANCING IS GOING TO GET TOUGH

Today’s post is written by Michael Green, Commercial Loan Originator for Counsel Mortgage Group, LLC CRE FINANCING IS GOING TO GET TIGHT Yes, I know, after 16 months of increasing rates and continuing QT to the tune of about $1 billion/mo., things are already tight. But did you know … Over the next 12 months, the U.S. CRE market will wrestle with the reality that three-quarters of a trillion dollars in loans are scheduled to come due. Within the context of $4.5 trillion that is the U.S. commercial real estate debt market, this juncture could be a turning point that...

INVESTOR VIDEO SERIES – CAN I QUALIFY TO PURCHASE AN INVESTMENT PROPERTY?

If you can qualify for a primary residence, you can probably qualify to purchase an investment property. When purchasing an investment property, the appraiser prepares a schedule of market rents. The lender takes 75% of the rents on this schedule and subtracts the proposed mortgage payment. This amount is then added to your income or debts. Thus, if your debt-to-income ratio is sufficient to purchase a primary residence, you can likely pick up an investment property. If you want to invest in real estate and need help determining whether you can qualify, give us a call. We have helped many...

INVESTOR VIDEO SERIES – ROI AND CASH FLOW

Return on investment (ROI) and cash flow are factors to know when purchasing an investment property. For example, let’s assume you put $100,000 down on a property, rent it for $3,000 per month, and your expenses, including mortgage, are $2,400 per month. The cash flow is $600 per month income, which totals $7,200 per year. In order to determine the annual ROI, the annual income is divided by your initial investment, in this case $7,200/$100,000 = 7.2% ROI. Note this calculation does not consider the payment of principal on the loan (which would result in a higher ROI) nor potential...

FIRST-TIME HOMEBUYER VIDEO SERIES – COMFORTABLE PAYMENT

If you are a first-time homebuyer, be sure you are comfortable with your new payment. Lenders may pre-qualify you for a higher loan amount and monthly payment than you want to spend. Don’t fall into the trap of going for the higher payment just because the lender says you can qualify for the mortgage. In determining your qualification, lenders do not take into account your cell phone bill, streaming services, internet, electric and utility bills. You will have to pay these in addition to your monthly mortgage payment. The monthly mortgage payment includes principal, interest, taxes, insurance, and mortgage insurance...

CLE by the Sea

CLE by the Sea

What a great conference! It was a pleasure to attend and speak on real estate finance at the Real Property Section of the State Bar of Arizona CLE by the Sea in Coronado, California. The faculty was excellent and shared a wealth of knowledge and information. They covered topics including: up-to-date AZ real estate market statistics, land use regulations, short-term rentals, title insurance, commingled real estate financing and investment, bankruptcy, receivership, HOA, alternative dispute resolution, water law, alternative energy, and real estate transactions on tribal lands. Whew! Thanks to Tricia Schafer, Esq. and David Iskowitz, Esq. for co-chairing and putting...

FIRST-TIME HOMEBUYER VIDEO SERIES – CREDIT

Credit is a big factor considered by lenders when applying for a mortgage. The better the credit score, the better the interest rate, the lower the mortgage insurance, and the lower the payment. One quick tip to get a good credit score is to keep your credit card balances low. Although there is no magic percentage of the credit limit you should maintain, try to keep balances less than 50% of the credit limit during the entire billing period, and 30% of credit limit seems to be a good rule of thumb. Many people think their credit may not be...

State Bar of Arizona – CLE by the Sea

State Bar of Arizona – CLE by the Sea

I am honored to be speaking on real estate finance at the State Bar of Arizona CLE by the Sea conference July 9-11 at the Hotel del Coronado in California. I will be discussing residential and commercial real estate finance. If you would like to learn more about it, or attend, click here: https://www.azbar.org/for-lawyers/cle/cle-by-the-sea/ Hope to see you there!

THE SCARIEST TERM IN YOUR NEW COMMERCIAL MORTGAGE

  We’ve written before about lenders raising the bar, or tightening, lending terms and conditions. One of the terms that’s started showing up in the covenants is “full recourse only”. Everything beyond the value of the property is now on the line. This was a somewhat common term in the 70’s and early ‘80s going through and coming out of the stagflation period at the time. But this had largely vanished from CRE loans when markets were relatively stable. (This term has been maintained in SBA loans from at least 2000, re-named as a “personal guarantee”.)   A June brief...

FIRST-TIME HOMEBUYER VIDEO SERIES – DOWN PAYMENT ASSISTANCE

    You may have heard of loans where you don’t have to put any money down, where the county or another entity will make the down payment for you.  These are known as down payment assistance (DPA) programs.  The down payment assistance can take many forms, such as a loan that will have to be paid back, or a grant that does not need to be paid back.  Even though it sounds great that you don’t have to put any money down, many times the loans have higher rates and costs than if you did make a down payment. ...

FIRST-TIME HOMEBUYER VIDEO SERIES – FHA V. CONVENTIONAL LOANS

  There are a couple of different types of loans that are popular for first-time homebuyers.  A conventional loan requires a minimum 3% down payment, and has monthly mortgage insurance.  The mortgage insurance can be removed from the payment when you have 20% equity in the home.  A FHA loan requires a minimum 3.5% down payment, and has 2 types of mortgage insurance:  up-front mortgage insurance which is a lump sum that is added to the loan amount, and a monthly amount that is included in your monthly mortgage payment.  Typically, if you have a great credit score, the conventional...