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Understanding Apartment Loans - What to Ask an Apartment Lender?

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apartment lendingApartment loans provide money for investors who want to buy or to refinance a property with multiple units. Whether financing for a triplex or financing for an eight-unit apartment building is needed, it helps to understand some of the items that are expected. Investors can ask Direct Apartment Lenders any question about financing a commercial property.

How Can I Get Approved for an Apartment Loan?

You must submit a loan application and information about the subject property to receive consideration for an apartment loan. To get approved for an apartment loan, the property must meet the lender’s minimum condition and performance requirements. Your credit rating and other details might factor into the decision, as well. 

When Will I Receive an Approval Decision?

Typically, a loan officer can quickly review the overall parameters of a commercial loan scenario, and a pre-approval might be provided within one or two days. However, every transaction is unique, and timely submitted information could lead to a loan approval within two weeks. 

Is Experience Needed to Get Approved for an Apartment Loan?

Not in every case. Although, when borrowing money for large commercial buildings, such as a 50-unit apartment building or for a 200-unit apartment complex, an investor with several years of experience may receive more consideration.

According to Fannie Mae,  it maintains strict underwriting standards for multifamily loans. For this reason, a borrower’s financial strength, as well as her track record with property management and real estate holdings are thoroughly reviewed. 

Some apartment lenders who underwrite loans for the commercial mortgage-backed securities market may be able fund certain large-scale transactions for borrowers without a significant amount of property management experience. 

What Type of Apartment Loans do You Offer?

Knowing whether an apartment lender offers government financing, portfolio products or hard money loans is important. The type of loan products that are offered could indicate if short-term financing or 30-year fixed-rate loans are available.

A lender that provides a variety of programs might also offer competitive commercial mortgage rates.

Does Your Company Have a License to Fund Apartment Loans?

Some mortgage companies are operating throughout the United States without a state-issued license to fund apartment loans. 

Companies that are licensed to issue commercial mortgage loans have met a variety of regulatory and compliance standards. Therefore, it is wise to apply for a commercial property loan via Direct Apartment Lenders.

What are the Initial Items That I Need to Apply for An Apartment Loan?

The items needed will differ by loan type. A lender will require a sales contract and other details for a purchase transaction, while refinancing a commercial property will generate another checklist of items to gain a mortgage loan approval.

Generally, a lender will require details about the subject property, such as its street address, market value, rent rolls, existing debt and the purpose for the loan.

How Long Does the Process Take From Application to Funding for an Apartment Loan?

If everything fell smoothly into place, an apartment building loan could be completed within about three weeks. Since every transaction is unique, and unforeseen items may be needed prior to funding, investors should expect for an apartment loan to take roughly 45 to 60 days to close. 

What are Your Mortgage Rates for an Apartment Loan?

Investors can inquire about a lender’s mortgage rates for apartment loans. 

While, it might be difficult to determine a precise mortgage rate, prior to a credit check and reviewing the overall elements of the property, a reputable lender may be able to provide a range of interest rates for apartment mortgage loans.

For instance, a lender who offers mortgage rates for apartment loans that range between 4.5 percent and 8 percent might offer competitive financing.

Although, a lender that starts in the area of double-digit interest rates might be a signal for an investor to seek better mortgage rates or to work with Direct Apartment Lenders.

What is the Minimum Credit Score to Qualify for an Apartment Loan?

Banks and many traditional lenders may require an investor to have a credit score of 700 or greater to qualify for an apartment loan.

However, some lenders may offer financing for an apartment building to borrowers with credit scores that range between 660 and 680 points.

Buyers with a down payment of 30 percent or greater, or commercial property owners that are seeking a 60 percent loan-to-value refinance might be approved for an apartment loan with lower credit scores.

Therefore, the exact credit score for a 12-unit apartment building or a triplex may be discussed with Direct Apartment Lenders.

Summary

Preparation for an apartment loan is a lot easier, when an investor understands some of the steps that are needed to successfully complete the process.

Direct Apartment Lenders offers nationwide funding for multi-unit properties.

Contact us today for more information about purchasing or refinancing a commercial property.

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