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Questions

  1. What are the basic terms I can expect for a typical loan? Specifically, what loan-to-value (LTV), interest rate, term, and amortization can I expect?
  2. Is the loan non-recourse, or does it have to be personally guaranteed?
  3. What are the costs of the loan? Specifically, what are the origination fees (typically 1% of the loan), and what is the cost of 3rd party reports, such as the appraisal, structural and environmental reports, and legal fees?
  4. What size loans do you typically do, and in what areas?
  5. What are the prepayment penalties if you decide to refinance or sell before the term of the loan?
  6. What are your liquidity and net worth requirements? Typically the lender will require the sponsor(s) to show liquidity of 10% of the loan and a net worth equal to the loan balance.
  7. Do you require any reserves or minimum account balances? Some lenders want you to deposit 6-9 months of interest payments into an escrow account and/or keep a minimum balance in the bank account. Some also want you to bank with them as a condition of the loan.
  8. What is the typical time to close from the time I order the appraisal? Normally loans take 45-60 days from the time the appraisal is order to close. Make sure you know the timeframe for this lender.
  9. How do you define a “stable” asset? Typically assets that are at least 80% occupied are considered “stable” and anything less occupied is considered “distressed.” If you’re talking to this lender about a conventional loan for a “stable” asset, make sure you know what they consider “stable.”
  10. What kind of loan products do you provide? Lenders could provide one or more of these loans: conventional, Fannie Mae/Freddie Mac loans, FHA/HUD loans, bridge loans, and/or construction loans. The more products a broker can provide, the better.
 

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