Factor rates are used for alternative forms of financing, commonly associated with short-term loans or merchant cash advances. It differs from traditional interest rates, where instead of being expressed as a percentage, a factor rate is expressed as a decimal and represents the total cost of repayment. Essentially, a factor rate represents the total cost…
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Balloon Mortgage Calculator
A balloon mortgage is a type of loan that requires low or no monthly payments and requires a lump-sum payment at the end of the loan term. It differs from fully amortized loans where equal installments of the total balance are repaid over a period of time, and with a balloon mortgage, the remaining balance…
Loan-to-Cost Ratio: What It Is & How to Calculate It
The loan-to-cost ratio, also known as LTC, is a calculation that’s used to evaluate the costs of a commercial real estate project. It is calculated by taking the loan amount of a commercial mortgage and dividing it by the property’s total project costs. It is reflected as a percentage. Lenders use the LTC ratio to…
Loan-to-Value (LTV) Ratio: What It Is & How to Calculate It
The loan-to-value (LTV) ratio compares your loan amount against the value of the collateral it is being secured by. Lenders use this to determine your loan eligibility and the specific rates and terms you’ll get.
The LTV ratio is a common requirement for secured loans, such as real estate, equipment financing, and vehicle loans. A good LTV ratio is usually 80% or less. However, the requirements can vary depending on the specific type of loan you’re applying for, the lender you choose, and the strength of your credit and finances….
What Is a Blanket Mortgage? A Beginner’s Guide
A blanket mortgage (or blanket loan) allows a borrower to finance multiple properties under one financial agreement. It streamlines the lending process and saves time and money by cutting down on paperwork and various fees associated with applying for several individual mortgages. Seasoned real estate investors use it to manage both commercial and residential properties…
What Is a Hard Money Loan & How Does It Work?
A hard money loan is a form of short-term financing for real estate and typically has easier qualification requirements compared to traditional forms of financing. It can also be easier to get approved if you have bad credit. Unlike traditional loans, hard money lenders can issue financing on properties that need repairs. These flexibilities, however,…
What Is an FHA Multifamily Family Loan?
FHA multifamily loans are used to assist in the purchase of multifamily real estate and offered by eligible loan providers. The Federal Housing Administration (FHA) provides insurance for these loans, which are subject to certain criteria defined by the FHA. Since these loans are backed by the government, they’re more accessible and typically offer more…
Buying vs Leasing Commercial Real Estate
If you’re looking to acquire commercial real estate (CRE), buying and leasing are two options you can consider: Buying real estate typically requires more cash upfront but it allows you to build equity, has more flexibility in making modifications to the property, and has fewer long-term variable costs. Leasing real estate requires less upfront money,…