Understanding Prepayment Penalties

Mortgage loans are expensive to originate.  It is not uncommon for consumer mortgages to cost upwards of $9,000.  Lenders typically recoup those costs through a combination of upfront fees and interest revenue over the life of the loan. 

If a borrower pays off a loan shortly after origination, the lender is at risk of losing money on the loan. Enter prepayment penalties.  A prepayment penalty is a contractual clause that states the borrower is going to pay the lender an additional fee if the borrower pays the loan off early.  This really isn’t a penalty at all.  It is a way for the lender to make sure they don’t lose money on a loan.

For example a standard prepayment penalties with a 5 year structure of 5/4/3/2/1 structure. This means that if the borrower pays off the loan in year one, they have a 5% prepayment penalty, in year two, a 4% prepayment penalty, in year three, a 3% prepayment penalty, and so forth. So, you might be wondering how this affects the borrower, and the answer is, it depends on your investment strategy. Let’s dive in.

The rental investors looking to grow a legacy of rental properties and hold on to them long term (we call these properties “permanent rentals”) are not really affected by the prepayment penalty.  Since their investment strategy focuses on the lifetime of the loan, paying off the loan in the first five years is a moot point.

On the other hand, investors looking to purchase rental properties with flexibility to sell in the foreseeable future (we call these properties “transitional rentals”) are very concerned about the prepayment penalty. These investors are interested in market conditions and want to be able to sell the property at the right time without worrying about paying a penalty fee.

Free Business And Real Estate Investing eBooks

Contact Winston Rowe and Associates

Welcome to Winston Rowe and Associates knowledge blog, scroll down to the right for posts about commercial real estate.

This is a list of free books about real estate investing, commercial real estate financing and business strategy.

We’re always on the lookout for great free books so bookmark this blog and check back for monthly updates.

These links are not affiliate marketing links, just publications that we feel may add value to people and businesses.

Commercial Real Estate Finance

The eBook Commercial Real Estate Finance, by Winston Rowe & Associates discusses the fundamentals of the different types of commercial property, the various options that are included with properties and the capabilities that you will have as a commercial property investor.

Real Estate Investing Articles

This is a link to 1226 real estate investing articles written by industry veteran’s.

25 Productivity Tips for Successful Business Owners

Productivity is critical to your success at work. Business owners, managers and executives all want to get the most from their employees. If you’re not performing as efficiently or effectively as others, your long-term job prospects could be in trouble.

Real Estate Investing: How to Find Cash Buyers and Motivated Sellers

“Real Estate Investing: How to Find Cash Buyers and Motivated Sellers” teaches real estate investors and those interested in learning to invest in real estate how to define and target ideal cash buyers and motivated sellers. The book covers absentee owners, rehab investors, Section 8 landlords, and other buyer types. Some of the marketing topics include mailing lists, postcards, both online and offline marketing strategies along with examples. Anyone who wants to wholesale a house or is curious about flipping houses should pick this book to get educated on cash buyers and motivated sellers for their real estate investing.

Real Estate – Breaking Bad How to Flip Decaying Real Estate Properties for Profit

Tired of working 9 to 5? You should think of making money with real estate! Yes, the effort is well worth it! You just have to ditch the misconceptions and embark with all the passion you have in store for this amazing trip of rehabbing old houses and giving them a new look and a new owner.  Your reward? A nice profit!

Real Estate Forms Portfolio

A FREE and ready-for-download eBook consisting of a comprehensive collection of real estate-related forms for real estate investors.

Real Estate Secrets Exposed

This FREE e-Book sheds some light on the often mysterious and sometimes daunting world of real estate.

Use 1031 Real Estate Exchanges to Create Multiple Streams of Income

Discover how to use 1031 tax-free exchanges, tenants in common interests, and zero cash flow properties to create new sources of income. Learn how to offer bundled services and attract new clients. This FREE, ready for download eBook is perfect for anyone involved in real estate, taxes, mortgages, insurance, or law.  Download it now!

Make Money Through Real Estate Renovations

Download this FREE eBook and learn how a successful investor makes thousands of dollars from real estate renovations. Download it now!

Discover the Secrets of How to Fund Your Real Estate Deals with Private Lenders

Download this FREE e-Book, and discover the new secrets of funding real estate deals in the post-bubble real estate market, where traditional lending sources are getting very difficult to obtain. Download it today!

Real Estate Investing Strategy for Rehabs

This eBook is about residential rehabbing and the multiple strategies that can be used to maximize profits in this current economic climate. My goal has always been to share knowledge with folks that are truly interested in rehabbing and view it as not only for monetary gain but also see is as an “art and science” like I do. Happy Rehabbing!!

How to Be A Super Property Investor

A FREE, step-by-step guide that will help you become a super real estate property investor. Learn all the basic and some advanced investing techniques that have generated millions for property investors. Ready for download now!

Financial Terms Dictionary – 100 Most Popular Financial Terms Explained

This practical financial dictionary helps you understand and comprehend more than 100 common financial terms. It was written with an emphasis to quickly grasp the context without using jargon. Every terms is explained in detail with 600 words or more and includes also examples. It is based on common usage as practiced by financial professionals.

The Prince by Niccolò Machiavelli

Niccolò di Bernardo dei Machiavelli was an Italian diplomat, politician, historian, philosopher, writer, playwright and poet of the Renaissance period. He has often been called the father of modern political philosophy and political science.

The Science of Getting Rich by W. D. Wattles

This book is pragmatical, not philosophical; a practical manual, not a treatise upon theories. It is intended for the men and women whose most pressing need is for money; who wish to get rich first, and philosophize afterward. It is for those who have, so far, found neither the time, the means, nor the opportunity to go deeply into the study of metaphysics, but who want results and who are willing to take the conclusions of science as a basis for action, without going into all the processes by which those conclusions were reached.

Sun Tzu Art of War

Written in the fifth century B.C., Suntzu and Wutzu still remain the most celebrated works on war in the literature of China. While the chariot has gone, and weapons have changed, these ancient masters have held their own, since they deal chiefly with the fundamental principles of war, with the influence of politics and human nature on military operations; and they show in a most striking way how unchanging these principles are.

Make Extra Money Flipping Houses While On Vacation by Jason Medley

Reveals his simple and proven systems to automate, delegate and outsource nearly every function of his business except cashing his checks. He shows the exact steps that has allowed him to go on multiple vacations with his family throughout the year while having his system continue to flip houses for him.

Achieving Wealth Through Real Estate: A Definitive Guide To Controlling Your Own Financial Destiny Through a Successful Real Estate Business

Have you ever thought about making money with real estate? In Achieving Wealth Through Real Estate: A Definitive Guide to Controlling Your Own Financial Destiny Through a Successful Real Estate Business, author and entrepreneur Kirill Bensonoff takes you through the process of starting your own real estate business step-by-step, featuring his expert tips and tricks.

Business Loans Uncovered

Knowing if you qualify is one of the most important things to know when applying  for a loan of any type. Blindly applying for a loan and being declined increases the chances of you being declined again and again because you not only lower your credit score each time you apply, multiple inquires also serves a red flag to other lenders and as a result lenders put you in a high risk category and charge higher interest rates in the event of an approval Includes: ​Traditional Lenders, Government Sources, The 7(a) loan guarantee program, SBA Low Doc loan program, SBA Express loan program, Factoring, Venture Capitalists, Angel Investors.

50 Simple Secrets To Be A Happy Real Estate Investor

Discover the secrets used by successful real estate investors to create happiness in their lives and businesses. Naturally create more happiness for yourself by implementing time-tested secrets to happiness used by other real estate professional and investors just like you. Start to experience more productivity, satisfaction, and success immediately.

Real Estate Finance and Investment

This course is an introduction to the most fundamental concepts, principles, analytical methods and tools useful for making investment and finance decisions regarding commercial real estate assets. As the first of a two-course sequence, this course will focus on the basic building blocks and the “micro” level, which pertains to individual properties and deals.

Introduction to the Law of Property, Estate Planning and Insurance

Introduction to the Law of Property, Estate Planning and Insurance is an up-to-date textbook that covers legal issues that students must understand relating to real estate (an especially important business asset), as well as estate planning and insurance.

The text is organized to permit instructors to tailor the materials to their particular approach. The authors take special care to engage students by relating law to everyday events with their clear, concise and readable style.

Defensive Real Estate Investing: 10 Principles for Succeeding Whether Your Market is Up or Down

As the real estate market changes after years of aggressive growth, investors everywhere are faced with uncertainty, wanting to know how to prepare for a potential real estate bust and make sure they don’t lose money.   In his authoritative new work, Defensive Real Estate Investing, bestselling author and real estate expert William Bronchick provides guiding principles to safe investments for beginning to intermediate real estate investors.

Private Real Estate Investment: Data Analysis and Decision Making

Fiduciary responsibilities and related court-imposed liabilities have forced investors to assess market conditions beyond gut level, resulting in the development of sophisticated decision-making tools. Roger Brown’s use of historical real estate data enables him to develop tools for gauging the impact of circumstances on relative risk. His application of higher level statistical modeling to various aspects of real estate makes this book an essential partner in real estate research. Offering tools to enhance decision-making for consumers and researchers in market economies of any country interested in land use and real estate investment, his book will improve real estate market efficiency. With property the world’s biggest asset class, timely data on housing prices just got easier to find and use

Construction Funding: The Process of Real Estate Development, Appraisal, and Finance

Construction firms operate on narrow profit margins and the success of construction projects is hinged upon proper financing. Construction Funding is the only single volume, concise text on the financial aspects of building and developing.

The book acquaints the reader with a set of procedures specifically designed to solve the unique financial challenges facing the construction industry. It guides the reader step-by-step through each phase of financing a development project, from simple one-family residences to large multi-unit complexes. Construction Funding also addresses raising capital, selecting markets, rating sites, insurance, joint ventures, loan options, and cash flow management. Separate sections are devoted to the conduct of profitability studies and to finding after-tax rates of return. Construction Funding, Fourth Edition, has been updated to provide current costs and funding methods and additional learning features such as key terms, review questions, and learning objectives.

How to Make Money With Real Estate Options: Low-Cost, Low-Risk, High-Profit Strategies for Controlling Undervalued Property….Without the Burdens of Ownership!

I have dabbled with real estate for years usually making good money and sometimes being hammered (like with the last crash in the RE market). But overall RE has been good to me. Be that as it may, I have lost enough to know that I wanted to minimize my risk while still having plenty of upside potential. Real estate options are a vehicle to accomplish this goal. Thus, I started educating myself on the subject and found this most excellent book. Mr. Lucier is thorough and detailed and relates the reality of what it takes to profit (not like some of these dream weaver real estate gurus who like to sell you on how “easy” it is).

50 Simple Secrets To Be A Happy Real Estate Investor

Discover the secrets used by successful real estate investors to create happiness in their lives and businesses. Naturally create more happiness for yourself by implementing time-tested secrets to happiness used by other real estate professional and investors just like you. Start to experience more productivity, satisfaction, and success immediately.

Marketing Strategies for Real Estate Photography

One of the biggest problems that real estate photographers have once they have set up their business as a legal entity, obtained all the right equipment and perfected their technique is obtaining new clients.

Clients and customers are the lifeblood of any business, but how do you obtain new clients after starting your business?

By developing and executing a strategic marketing plan tailored to your business.

This short guide has been written to help real estate photographers develop their marketing plan and assist with winning new business.

It includes a series of digital and direct marketing strategies along with useful tips and lessons the author has learned from his own experiences that can save you time and money when growing your business.

A marketing action plan template has been included to help photographers execute the strategies learned in this guide book.

Books by Dr William Edward Deming

William Edwards Deming (October 14, 1900 – December 20, 1993) was an American engineer, statistician, professor, author, lecturer, and management consultant.

Educated initially as an electrical engineer and later specializing in mathematical physics, he helped develop the sampling techniques still used by the U.S. Department of the Census and the Bureau of Labor Statistics.

In his book The New Economics for Industry, Government, and Education Deming championed the work of Walter Shewhart, including statistical process control, operational definitions, and what Deming called the “Shewhart Cycle, which had evolved into Plan-Do-Study-Act (PDSA). That was in response to the growing popularity of PDCA, which Deming viewed as tampering with the meaning of Shewhart’s original work.

Deming is best known for his work in Japan after WWII, particularly his work with the leaders of Japanese industry. That work began in July and August 1950, in Tokyo and at the Hakone Convention Center, when Deming delivered speeches on what he called “Statistical Product Quality Administration”.

Many in Japan credit Deming as one of the inspirations for what has become known as the Japanese post-war economic miracle of 1950 to 1960, when Japan rose from the ashes of war on the road to becoming the second-largest economy in the world through processes partially influenced by the ideas Deming taught

Cash Out Commercial Refinance No Advance Fees Nationwide

Commercial Loan Refinance Tips

Refinance loans are the most common commercial real estate loan. There are key detail items that lenders consider when reviewing this loan type.

First, what is the reason for the refinance and why are you not working with your current mortgage holder?

Questions your new lender will have are; did you violate a covenant in your current mortgage agreement? Did your property drop in value? Are there economic problems in the area your property is located? Do you have personal net worth or liquidity issues? Did you shop your loan request to death creating high risk profile with too many credit report inquiries in a short period of time? Just to name a few.

Be prepared to answer these questions.

Second, the commercial refinance loan criteria are very straight forward. Your maximum loan to value will be 60%. You will need to have a minimum personal FICO score of 680 with no bankruptcies in the previous 7 years. Your personal net worth will have to be equal or greater than the gross refinance amount and the occupancy rate will have to be 80% for a conforming loan.

Third, the supporting documentation will be the review of the last three years of your personal and business financials as well as rent rolls. If there are improvements to the subject property you will need to submit a detailed plan with the necessary permits.

The key to a smooth refinancing process is to be truthful on your loan application and to fully cooperate with the due diligence and underwriting specialists, this is how I do it approach does not work. If you don’t cooperate and misrepresent material facts, you will most likely not receive your commercial loan.

At Winston Rowe & Associates, their primary objective is to provide the most reliable and efficient means of sourcing both debt and equity for your commercial real estate loans.

Guide To Refinancing A Commercial Mortgage Winston Rowe & Associates

WINSTON ROWE & ASSOCIATES REFINANCING COMMERCIAL MORTGAGE

 

Winston Rowe & Associates, a no advance fee commercial real estate finance and due diligence firm. Savvy commercial real estate owners have been turning to them because of their service, integrity and competitive rate and terms.

You may have many reasons for refinancing a commercial mortgage, from avoiding an upcoming balloon payment to lowering your long-term interest rate. But troubles in the commercial real estate sector mean the landscape has changed for businesses that want to work with lenders.

1 What do you Need a New Loan:

Consider carefully why you want to refinance. If you need money in hand for repairs or improvements, you may be seeking a cash-out product. If your current loan product has an adjustable rate, which makes month-to-month cash flow projections much more difficult, you will probably want to investigate a fixed-rate loan. If you have a balloon payment coming due, you will want to refinance into a new loan to avoid that liability.

Knowing what your long-term business goal is will guide you as you choose a loan product and even decide whether refinancing is cost effective or possible.

2 Supporting Documentation:

Prepare all of the documents the lender will need to assess your business. These will include tax returns, balance sheets, profit and loss statements, and a projected cash flow for the project you want to refinance. Many mortgage lenders will require a well-thought-out business plan.

3 The Value of the Property:

Be aware of the current valuation of the property you want to refinance. Especially in the current climate, the property’s value may have changed significantly since the original mortgage funding. This will change your loan-to-value calculation, or LTV, and may even mean you have to come up with additional equity in order to qualify for a refinanced loan.

4 Can You Make The Monthly Mortgage Payments:

Use a debt service calculator tool to make realistic projections of whether your monthly income on the property will cover the mortgage payments for any particular loan product.

5 Personal Credit History:

Consider how your credit may affect the transaction and talk this over with your prospective lender. Bad credit will restrict your options, and can often mean a higher interest rate, but it is still possible to obtain refinancing with less-than-perfect credit. Another vehicle that lenders often use with clients with bad credit is a balloon payment mortgage.

These can prove worth considering, but you should exercise extreme caution, as you are probably committing yourself to another refinance in the near term, with all the associated costs.

6 Advance Fees for Due Diligence & Loan Processing:

Winston Rowe & Associates does things differently, they never charge upfront or advance fees, so find out all the upfront costs of any loan you are considering. They may include appraisal fees, title insurance, environmental reports and lender processing fees–often running into thousands of dollars.

Here is where is it worth considering whether to go with a deal from your current lender, which may lower some of the third-party fees, or whether a competing lender is willing to offer you a deal on its own fees in order to win your business.

You should learn how much of these costs you can roll into the loan amount, and how much you will have to pay out-of-pocket.

At Winston Rowe & Associates, their primary objective is to provide the most reliable and efficient means of sourcing both debt and equity for your commercial real estate loans.

Winston Rowe & Associates provides no upfront commercial real estate loans in the following states.

Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine,  Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia,   Washington, Washington DC, West Virginia, Wisconsin, Wyoming

Commercial Loan Refinance Tips Winston Rowe & Associates

 

Commercial Loan Refinance

Winston Rowe & Associates a no upfront fee commercial real estate advisory and due diligence firm specializes in the financing of commercial real estate transactions in the United States and Internationally.

They have prepared this article to provide advice for refinancing commercial real estate.

For more information about Winston Rowe & Associates and their commercial loan programs, they can be contacted at 248-246-2243 or visit them on line at http://www.winstonrowe.com

Refinance loans are the most common commercial real estate loan.

There are key detail items that lenders consider when reviewing this loan type.

First, what is the reason for the refinance and why are you not working with your current mortgage holder? Questions your new lender will have are; did you violate a covenant in your current mortgage agreement? Did your property drop in value? Are there economic problems in the area your property is located? Do you have personal net worth or liquidity issues? Did you shop your loan request to death creating high risk profile with too many credit report inquiries in a short period of time? Just to name a few.

Be prepared to answer these questions.

Second, the commercial refinance loan criteria are very straight forward. Your maximum loan to value will be 60%. You will need to have a minimum personal FICO score of 680 with no bankruptcies in the previous 7 years. Your personal net worth will have to be equal or greater than the gross refinance amount and the occupancy rate will have to be 80% for a conforming loan.

Third, the supporting documentation will be the review of the last three years of your personal and business financials as well as rent rolls. If there are improvements to the subject property you will need to submit a detailed plan with the necessary permits.

The key to a smooth refinancing process is to be truthful on your loan application and to fully cooperate with the due diligence and underwriting specialists, this is how I do it approach does not work. If you don’t cooperate and misrepresent material facts, you will most likely not receive your commercial loan.

At Winston Rowe & Associates, their primary objective is to provide the most reliable and efficient means of sourcing both debt and equity for your commercial real estate loans.

Winston Rowe & Associates provides no upfront fee commercial loans in the ensuing states.

Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, Washington DC, West Virginia, Wisconsin, Wyoming

Things To Consider When Refinancing A Commercial Loan By Winston Rowe & Associates

Things To Consider When Refinancing A Commercial Loan By Winston Rowe & Associates

Are you looking into a refinance of your current commercial loan agreement? Or has your bank offered to discount your current mortgage? When thinking of your modification, it’s the benefits that you should consider carefully.  This is why savvy commercial real estate investors have been turning to Winston Rowe & Associates a no upfront fee company with a reputation for quality underwriting, fast turnaround, and excellent service,

Why Consider A Commercial Loan Refinance?

Interest Rate Changes

You may have heard other lenders and there offering of low interest rates, or your loan could be tied up with a high interest rate. In such cases it might be possible to refinance loan agreements with another lender or even renegotiate your loan terms with your existing lender.

Extend The Loan Term

Increasing the amortization period from 20 to 25 years, can have a significant impact on the repayment amount. Your overall interest payments would be higher, buy your cash flow would be made healthier by reducing your regular payments. In most cases, business that are having problems making payments can be helped by improving capital in this way.

Cash Out

If you’re lucky and have equity within the business pulling out some cash could free up some spending capital. This can offer at least two major benefits, namely enabling you to invest the capital at a good rate of interest or provide you with a cash sum to enable expansion.

Consolidate Multiple Loans On The Property

You may have a few loans that can be combined into better terms. Many business owners that refinance commercial loans through combing loans in this way can save a great deal in their monthly repayments, particularly useful in a business that relies in a strong cash flow situation.

In your reasoning for refinancing or modification of the loan, there needs to be benefits to you. Otherwise there is no logic in doing so.

This benefit can be related to improved cash flow, tax benefits or expansion through the acquisition of capital assets such as equipment, increased office space or improved manufacturing facilities.

Now let’s consider ‘How’ you are going to refinance your loan

You can either refinance your loan with your existing lender or with an alternative, like Winston Rowe & Associates. If you cannot refinance your loan you might do a commercial loan modification.

Many business owners tend to change their lenders for a better deal: a lower interest rate, longer period, reduced debt amount, or eliminate late payments. A clean loan modification, can and will generate positive results for you as well.

Through Winston Rowe & Associates efficient, end-to-end commercial real estate financing solutions they provide commercial mortgage capital to owners of all commercial property types. With flexibility and speed of execution, they are able to offer a broad range of financing capabilities.