Financing Options

Are you considering investing in commercial real estate and you have inadequate capital? You have to think through your goals and understand your mortgage options and how much you can comfortably afford to pay every month. They are so many different mortgages available and sometime choosing one can be an overwhelming task. All what you need to do is work with a responsible lender who will clearly explain options that best suits your needs and then from there you can select a mortgage that fits your financial situation.

Here are major financing options for commercial real estates:

Interest only mortgage
This are either adjustable rate or fixed rate loans; they have interest only payment option during a determined period in the first years of the loan. Mostly it’s the first ten years. During this period as a borrower you have the option of delaying the principal payment and make monthly payments that only repay interests. Its considered fit for a small set of buyers with fluctuating incomes.

Adjustable rate mortgage (ARM)
This a type of mortgage where the rate changes or adjusts on a particular schedule that is after an initial “fixed” duration. When choosing ARM you should know that it is considered riskier than a fixed rate mortgage because your payment may significantly change. But in exchange of taking this risk; you are rewarded with an initial rate that is below market rates. An ARM will help you in giving a short term boost to your finances.

SBA 7 (a) loan program
This is the most basic and mostly used within SBA loan program. If you want this loan you will have to apply through a participating lender institution.

SBA 504 loan program
Here you are provided with a long term fixed rate financing for your major fixed assets such as land and buildings

Jumbo loan
It’s a loan that exceeds the conforming loan limit. The current conforming loan limit for a single family home is 417,000 dollars for all states excluding Hawaii and Alaska where it stands at 625,500 dollars. A jumbo loan is considered a potential way of buying a high priced home. They have higher interest rates as compared to a conforming loan.

Balloon loan 
It’s a mortgage that require higher than usual onetime payment at the end of the term. This means that your payments will be lower in the year before that balloons payments are due. If you are considering a balloon loan you have to think whether you are capable of making of making a balloon payment when it’s due.

If you are looking to purchase commercial real estate in Alaska, you now have several financing options.

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Listing information last updated on April 25th, 2018 at 3:19pm AKDT.