Updated 14 days ago on . Most recent reply
Commercial Loan Refi
Hello BP Family,
Looking for some advice/guidance. I recently created a LLC approx. 1 year ago and refinanced my duplex from a FHA to DSCR loan. The commercial lender that I been dealing with hasn't been the best with communication and distributing documents when needed. Basically, I want to deal with someone else but I might be stuck. My rate is 7.875%, 30yr note, 71%LTV with a 5yr prepayment penalty. Any and all advice as to what options I may have would be greatly appreciated.
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You're not stuck with the lender, but you may be stuck with the loan. That 5-year prepay is the key. Most DSCR loans have a step-down penalty, so refinancing early could get expensive depending on where you are in the term.
At 7.875% and 71% LTV, your loan is not too far off with the market, so there's not a clear win in refinancing unless there's a bigger issue.
First thing I’d do is pull your note and confirm the exact prepay structure, then request a payoff to see what it would actually cost to exit. If the penalty is significant, it may make more sense to ride it out and plan a refinance later. If it’s manageable, then you’ve got options.
The communication issue is frustrating, but that’s separate from whether refinancing actually makes financial sense.
If you want, happy to take a look at the note and break it down with you.