First-timer with a commercial loan question
Hi everybody, I'm a first-time rental investor wth a general question about the financing process. I have the opportunity to purchase a six-unit apartment building in Pennsylvania with likely sales price of around $450,000. I've been working with a local financial consultant who says they've found some potential lenders for a commercial mortgage. The next step is for me to sign an financing agreement and pay an non-refundable underwriting fee, so I'd like to make sure everything looks above board before I pull the trigger. The terms of the agreement are:
- Loan amount: $337,500
- Interest rate: 4.75 - 5.25 fixed
- Term: 5 to 15 years; up to 25 year amortization
- Lender's fee: 0-1%
- Success fee: 1.5% of total funds financed
- Underwriting fee: $400
My primary question is: does of all this look standard? Are there any numbers that could be better, or should be red flags? Also, is it typical to enter into this kind of agreement before even making an offer on the property? I was expecting to get a pre-approval, make the offer, and then begin the underwriting process.
Thanks in advance for any advice.
Robert