Commercial Loan Refinance

Current Debt Coverage Ratio 1.27

Net Operating Income $235,000

Combined Monthly Payment $15,448

Proposed Loan – 10 year fixed, 30 year amortization. Borrower is planning on combining the two loans together and wants the security of having a fixed rate loan. Borrower also wants to roll in as much of the closing costs as possible into the loan amount to reduce “out of pocket” Best Commercial Loans.

Property Value – 9% Cap $2,600,000

Combined Current Loan Balance $1,635,000

Closing Costs $83,500 *

Proposed Loan Amount 1,735,568

Proposed Loan to Value 67%

Interest Rate 7.5%

Current Debt Coverage Ratio 1.54

Net Operating Income $235,000

Monthly Payment $12,743

Closing Cost Break Down (Pre Pay $72,500 [5% of 1st loan amount], Title at $3000, Lender Legal Fees at $2,200, Origination Fee at 1% or $17,185, Appraisal $4,000, Environmental $1,800) .

Cash flow increase is $2,704 per month or $32,449 per year while the cost to close the loan is high at $83,500 due primarily to the prepayment penalty. The borrower is facing a closing cost payback period of over two and a half years. In addition the interest rate has gone up considerable on the proposed loan, which of course increase the overall cost of the loan.

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