Commercial loan and after that conventional mortgage

9 Replies

Hi,

I have a few properties I purchased with cash. At this moment I don't have the option to get a conventional mortgage, but in a year from now I will have the option to that.

My question is, that if I have the option to get now a portfolio commercial loan, and one of the terms of the lender is - personal guaranty.

Will this term, will impact on my ability to get a conventional mortgage to purchase my premier residential in the future or not?

Thanks in advance

Aviv

All your debt will effect your buying and borrowing power in some way. It's hard to say how much without specifics and this is something you should discuss with your lender. If the asset still makes money than your borrowing power shouldn't change much, as the bank will know the original note is being paid so if it's a rate/term refi then they will be in better shape the previous lender. 

My concern would be transaction costs. If you're getting a loan now, and another for the same property in a year this will create a lot of overhead that will absolutely affect how lucrative a deal might otherwise be. 

again, specifics matter here, but its likely more efficient to get a commercial loan at terms you're going to be happier with for more than just a year. 

I respectfully disagree with the some of the above posts. I have many commercial loans that don't report on personal credit. However, when applying for a convention loan, they want tax returns, so it will be there on Sch E (because these are rentals). Rentals go on Sch E regardless of an LLC. And of course on the mortgage application you're supposed to disclose everything.

How much it will impact your chances of getting a conventional loan is hard to say, depends on the numbers, credit, cash reserves, DTI etc.

Originally posted by @Tarik Turner :

It depends on if the loan is reporting on non reporting. Most portfolio lends do not report against personal credit if the property is held in an LLC

You still have to disclose all your liabilities.  

Originally posted by @Alexander Felice :
Originally posted by @Tarik Turner:

It depends on if the loan is reporting on non reporting. Most portfolio lends do not report against personal credit if the property is held in an LLC

You still have to disclose all your liabilities.  

Actually that depends on the lender as well. There are lenders who do not require that information. (With that being said your all of your reporting debts should be on your credit report anyway)