New Commercial Equity Loan Creates Liquidity

Commercial building owners have struggled for decades on how to effectively and economically tap their commercial property's equity. This lack of liquidity seems to be one of the biggest complaints in commercial real estate ownership; equity rich, cash poor, as the saying goes.

There are a few new options however for the small commercial property owners (both investors and users) that are turning heads. Historically, accessibility to commercial equity via loan products has been very limited, and for good reason. Second lien position behind a separate financial institution is one of the riskiest positions for a commercial lender to be in.

However, in the past, small local banks have been known to take on these types of loans assuming that the combined loan to value and debt coverage ratios were strong - typically less than 60% LTV and over 1.4 on a DCR. Banks wrote these lines almost like a business loan that happen to be secured by the commercial building. The banks also, wanted a depository "relationship," as bankers always say, with the borrower.

Developer of large sophisticated projects also have had 2nd lien position loan options, called mezzanine loans. But these types of loans are normally only available to highly experienced and successful developers working on projects over $5,000,000.

Interestingly, a few lenders have recently stepped up and created commercial equity lines aka commercial lines of credit. The result is liquidity never before known for small building owners. Highlights include no upfront fees to close loan (no appraisal, no title, and no environmental fees), combined loan to values up to 75% and relatively low interest rates at Prime plus .75% - 1.25%.

We will see in time how much of an impact these commercial equity lines make on "Main Street" USA, but one thing is for certain: commercial property owners have more loan options now, than ever before.

Jeff Rauth is President of Commercial Finance Advisors, Inc out of Bloomfield Hills. He specializes in Commercial Real Estate Loans between $100,000 - $5,000,000. Offers unique loan programs such as Commercial 30 Year Fixed and 90% non SBA financing, Commercial Private Money, Commercial Equity Lines. He can be reached at 248 990-7602. Commercial Equity Line of Credit or Commercial Equity Line

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125% Equity Home Loans

If you are a homeowner in need of a home equity loan but you have not yet built up any equity in your home, don't despair. A 125 percent equity home loan may be the answer.

A 125 percent equity home loan is a second mortgage loan that allows you to borrow up to 25% more than the value of your home. For example, if your home is worth $100,000 and you owe $100,000 on the mortgage, this loan program would allow you to still borrow up to $25,000.

The 125 percent equity home loan is offered by various online lenders. Each lender has their own qualification and loan term guidelines but generally this is a credit score driven loan program. Credit score driven means that you have to have a certain credit score to qualify for the loan. In addition, your credit score usually determines the maximum loan amount you may qualify for and the maximum cash in hand you may receive. Also, some 125 percent equity home loan lenders may require seasoning on the length of time you have lived in your home. Three months is normally the minimum.

When it comes to a property appraisal, most 125 percent home equity loan lenders do not require you to obtain one. They generally will use the purchase price of your home as the value if you have lived in your residence for 12 months or less. If you have lived in your home over 12 months, a recent tax assessment, simple drive-by appraisal, or automated value model (avm) can be used. An avm is a computer generated assessment of your home's value which is based on recent home sales of comparable houses in your neighborhood.

For more information on 125% home equity loans, or to compare rates and programs of 125% home equity loan lenders visit http://www.equityloansource.com

Levetta Rivera is a successful mortgage broker and publisher of the following financial websites: http://www.equityloansource.com and http://www.militaryvaloan.com

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