Practical and Helpful Tips: Loans

How to Nail That 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 wonderful option for all kinds of real estate investors and professionals, old hands and novices alike. Rates are often in the 4.5 percent to 12 percent range and terms up to 35 years.

If you’re searching for permanent multifamily financing for a rental units, these are five helpful tips you can keep in mind:

1. Apply as soon as possible.

Any knowledgeable loan officer and underwriter will always expedite the process, beginning with the inquiry up to the funding. It isn’t always like that, but there are occasional humps that tend to bring delays. For example, underwriter backlogs or incomplete information from the borrower. Thus, you should always start the process as soon as possible.

2. There are several options.

They require proof that the borrower will still have income aside from the money that he is expected to pay for the sum he owes. Low debt-service coverage ratio requirements start at 1.25 and go up from there. To know your low debt-service coverage ratio, simply divide your NOI (net operating income) by the annual debt service obligation.

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