Friday, April 11, 2008
Recent Changes In Commercial Real Estate Financing
It has been said by many leading experts that more changes have occurred in commercial real estate financing in the last 5 years than the previous 50 years. Nowhere have these changes been more evident than in the Small Balance arena (Loans between $100k - $5 Mil).
Loan programs such as stated income (meaning no business/personal tax returns or personal financial statement required), 30 year fixed and 90% non SBA financing have popped up and are turning heads both traditional bankers and borrowers that are enjoying additional loan options never before seen.
How and Why? Secondary market While the residential side of the business embraced forming a secondary market in the 80s leading to great efficiencys and standardizations within the industry the commercial side floundered and continued to portfolio loans (meaning basically that the banks lent their own money and held onto the loan for the long term).
Essentially the secondary market creates more diversification and thus less risk for the investors (like pension funds) that hold onto the debt long term. Rather than having a individual loans in a specific geographic area the investors basically pools together 100s of individual loans (pools are often in the $100 of millions) all across the country and spread out with different building types, i.e. retail, office, multifamily etc. creating even more diversification.
While the troubles in the residential subprime market have concerned some that potential spill over will slow down development on the commercial secondary market, many experts argue that underwriting fundamentals are still in place - despite the creative loan programs that have been created. In a recent article published in Commercial Mortgage Insight the current national commercial delinquency rate on the secondary market dropped to .27% down from .33% one year ago.
Whats to come? We will see but increased competition between lenders/banks will probably continue to drive down margins and spur new competitive loan programs that will make owning commercial real estate easier (slightly) and help more potential owners become actually owners.
Jeff Rauth is President of Bloomfield Hills based Commercial Finance Advisors. He specializes in commercial real estate financing, purchase or refinance in the $100 - $5 Million range. He can be reached at 248 990-7602 http://www.cfa-commercial.com
Using Student Credit Cards to Build Solid Credit
Once a student graduates from high school and heads off to college they will be tempted with student credit cards. Student credit cards are aimed at college students. They are easier to get and are great for helping a student establish credit, however, they can also get a student into credit problems.
Before ever getting a student credit card a student needs to understand how credit cards work and how to avoid getting into debt. Credit cards offer a loan on purchases. A person can buy things with their credit card even if they do not have the money to pay for it. However, eventually the balance charged must be paid back. Most credit card companies allow a person 30 days to pay back the amount charged.
If the person fails to pay off the full amount within that time frame the credit card company charges them interest. Interest is charged at a percentage of the overdue balance. So if a student has a $100 balance and the credit card company charges 20% interest the student now owes $120.
Over time the interest keeps adding up and eventually if the student is only paying the minimum amount due they are in reality only paying off the interest and their credit card balance is never going to be paid off. This is why it is important for a student to understand how credit works before ever signing up with a student credit card.
Once a student decides to get a student credit card they need to look at a few things before making their choice. They need to check out the annual fee. An annual fee is a lump sum the credit card company charges to their credit card once a year. Some cards do not have an annual fee. additionally they need to look at the interest rate and other fees. Most accounts charge fees for going over the issued credit limit.
Sometimes interest charges can send a card over the limit. This not only causes extra fees, but also means the student can no longer use the credit card. Paying attention to the different terms and conditions of the card will help the student to choose the card that is best for them.
Student credit cards are a great way to establish credit. A student should be careful, though to make sure they are responsible when using their credit card, so they can get the benefits of it, not the problems.
Morgan Hamilton offers expert advice and great tips regarding all aspects concerning Credit Cards. Get the information you are seeking now by visiting Student Credit Cards
