The real estate industry is one of the fastest-growing industries in the world. Considering the fast-paced growth of the industry, it is no surprise that there is a huge demand for real estate in the present times. Buyers are ready to take loans for getting their dream homes.
Owing to this fact, several banks have provided the option for commercial loans for real estate. It has made the lives of homebuyers easier and paved a way for banks to earn regular interest from homebuyers.
There are two ways to avail the option of real estate loans.
You can go for the traditional mortgage option. Alternatively, you can also use SBA 7(a) and CDC/SBA 504 loans. Each of these options come with their own set of advantages and disadvantages.
Here is a breakdown of the down payments in each of these categories:
- Traditional loans – 15% to 35% of the overall price
- SBA 7(a) and CDC/SBA 504 loans – 10% to 15% of the overall price
Does the downpayment amount differ from bank to bank?
The down payment amount depends on certain factors. It mainly depends on the bank from which you are applying for the loan. Some banks can offer you a loan for a 15% down payment while others may charge up to 35%. Apart from this, there are several other factors associated with the down payment amount.
Is it safe to pay down payments when applying for real estate loans?
The idea of downpayment is to secure the lender from financial loss. It is a means to secure the maximum portion of the payment in case the purchaser fails to make the full payment. Certain terms have to be followed when you are making the purchase through a down payment. The terms secure both the seller and the buyer against discrepancies. Therefore, it is absolutely safe to pay down payments when applying for real estate loans.
Are commercial real estate loans long-term or short-term?
Commercial real estate loans generally have short repayment terms. The advantage of short repayment terms is the low-interest rates in comparison to the average 30-year residential loan. In case of long-term loans, you have to pay a large lump sum amount at the end of the term. This is not the case with real estate loans.
What are the requirements for commercial real estate loans?
There are basically five requirements for commercial real estate loans. They are –
- Your personal credit score
- Your net worth
- Your liquidity
- Your business experience
- Your income
Which are the best commercial loan banks?
Several banks offer commercial loans, especially for the real estate sector. However, there are some banks that are specifically known for their loan approval status. These banks offer loans at the best interest rates and do their best to make the buyer’s journey easy.
Here are some of the top commercial loan banks that you should know about.
- U.S. Bank
- Bank Of America
- Wells Fargo
- Chase Bank
- TD Bank