Five Useful Tips When Applying for a Multifamily Loan
Multifamily financing is a mortgage involving buying or refinancing large apartment buildings with a minimum of five units and smaller properties with at least two. Multifamily loans are a good option for both veteran and newbie real estate investors and professionals. Terms may extend up to 35 years and rates between 4.5 percent and 12 percent.
If you’re in search of a permanent multifamily loan for rental units, below are five handy tips you should consider:
1. Apply early.
Any good loan officer and underwriting team will do what they can to fast-track the process, starting from the inquiry all the way to actual funding. It isn’t always true, but sometimes there are issues that cause delays. For example, underwriter backlogs or incomplete information from the borrower. Therefore, it’s always best to begin the process early.
2. You have many options.
This will not be an exhaustive discussion on the various alternatives available for multifamily mortgage seekers. Low debt-service coverage ratio requirements start at 1.25 and go up from there. To compute your low debt-service coverage ratio, your NOI or net operating income must be divided by the annual debt service obligation.