Does this sound like a good loan program?

Question

Hello! I'm in the process of trying to find my first deal. I wanted to get my financing in order so I went to my local bank that has a commercial loan program. The details are 4.75% fixed for 5 years then it goes to a variable rate. Loans up to 300K, 20 year amortization, $500 closing cost plus title fees, loans up to 90% of property value, no PMI.

I have A++++ credit and about 70K in cash. I'm looking to buy properties 130k and below.

Does this sound like a good deal?

I appreciate any feedback you can provide me. The Bigger Pockets website has really helped open my eyes to real estate and I'm excited to build my portfolio.

Melissa Kirchhoff · Answer

Yes have them take that out (pre-pay penalty)! Otherwise, that sounds very good.

Fredie Robinson · Answer

Thanks Joshua. It seems like the perfect loan program for what I want to accomplish. Now it's time to make some deals!

Joshua D. · Answer

@Fredie Robinson

Sounds like a good loan to me! I like the fixed for 5 years thing and then variable after that. That is a creative way for them to keep the rate low.

We have a commercial loan that is about the same we pay 5% 3 year adjustment but fixed in between. 90% LTV. 20 year amt

Fredie Robinson · Answer

This is a commercial loan. No origination fee or personal guarantee required. There is a pre-penalty if payed off before 5 years but my loan officer said he can get that taken out if it' a problem.

Andrew Rickli · Answer

Is this commercial or a personal loan? Crazy they will do 90% LTV as that is over the federal reg amount and banks typically don't like to make exceptions (fed examiners don't like exceptions). Good deal if you can snag it.

Whats the origination fee? Are they requiring a personal guarantee?