Mike Taravella and Will Coleman explain what you need to know about loan assumptions.
- Yield Maintenance prepayment penalties are more expensive than step down prepayment penalties.
- The lower the U.S. Treasury rates, the more the expensive the prepayment penalty is for yield maintenance loans.
- Before getting a property under contract, contact the originator of the senior loan to verify the terms and conditions.
- Terms to verify: LTV, maturity date, interest only period, DSCR requirements, replacement reserves.
- Loan assumptions take longer to close than new debt. 75 days is a good estimate.
- Supplemental loans can be used in addition to loan assumptions to gain a higher LTV. Available terms will vary depending on the property and the borrower.
Expert Pro Tip: “Be clear on who and what you are, meditate on it, and then live and die by it”
To register to invest with us:
Rand CRE’s Facebook: https://www.facebook.com/randcre
Rand CRE’s Linkedin: https://www.linkedin.com/company/randcre
Rand CRE’s Instagram: https://www.instagram.com/randcre