Commercial Loan Terms
Hi! I’m looking to refinance cash out of my three unit rental property.
I owe 140k and it’s appraised for 280k, so I’m looking to take out around 60k. Positive cash flow of around $1200 per month before refi.
My question is about the terms and “commercial fee agreement”.
1. The commercial lender took preliminary info about my credit score, property, cash flow, value, etc. He said everything looks good and I would likely be approved for a 3.75-4.25 rate with 10-20 year rate lock and 25-30 year amortization. This sounds great! Does it sound too good to be true? Which leads me to the next question:
2. The lender is requiring a $5000 "commercial fee agreement" before moving forward. It's basically a fee for them doing the underwriting. They get most of the fee ($3500) even if they don't provide a LOI or the LOI is not within the terms we discussed (above). So my second question is, is this fee normal? With no guarantee of a loan? I just pay them to tell me yes or no?
This lender was referred by my residential mortgage broker (who is also a friend). He says he’s never used them before, but thinks they are legitimate.
I also paid a fee with my previous commercial refi, I just don’t remember it being non refundable even if they can’t provide a loan.
Just looking for feedback on both questions above.
Thanks!