Alpharetta Real Estate Finance Lawyer

If you are thinking about investing in commercial or residential real estate, you probably have questions about funding sources to get started or build your portfolio if you are not a novice. For one, it is crucial to understand who qualifies for financing. Commercial loans are mortgages given only to businesses, but both businesses and individuals can seek residential financing.

If you are thinking of becoming an investor or a homeowner, talk to an Alpharetta real estate finance lawyer at Sparks Law. Our knowledgeable attorneys can explain everything you need to know about the process.

Commercial vs. Residential Loans

Commercial properties are the sites of businesses, such as strip malls, office buildings, and apartment houses. Residential loans are investments in single homes or condominiums.

Note that an investor can purchase a single home to rent but will divulge this to the lender. Both forms of properties require collateral, usually in the form of the real estate. The lender puts a lien on the property until it is paid in full. If a borrower defaults on a residential or commercial mortgage, the lender will take control of the property.

Financing Commercial and Residential Properties

Commercial and residential lenders generally require borrowers to maintain good credit. However, lenders also evaluate the income a commercial property will produce and may finance the property at a higher interest rate without considering credit. These bridge loans allow the purchaser to secure the down payment and possibly shop for better terms afterward.

Commercial property also creates a revenue stream for lenders, who charge interest on the loan and usually take a percentage of the revenue the property generates. Residential lenders charge a fixed or adjustable interest rate. An experienced real estate attorney could guide an Alpharetta resident through the process of financing commercial or residential properties.

Types of Commercial and Residential Loans in Alpharetta

One well-known source of funding for commercial and residential projects is the conventional bank loan. This is an option for homebuyers or principals in a business who can demonstrate solid credit histories. Conventional loans feature competitive interest rates but usually require a down payment of 20 percent of the amount borrowed.

Many residential lenders do not charge borrowers a penalty for paying loans off early, but commercial lenders often do. Many private mortgage companies also offer competitive interest rates for residential borrowers. A real estate finance attorney at our local firm could discuss the pros and cons of this process. Other commercial financing options include:

  • 7A loans backed by the United States Small Business Administration (SBA), which are suited to smaller projects and can reduce risk for the lender because they guarantee partial loan repayment
  • SBA 504 loans, which are suitable for larger projects in which the borrower puts down 10 percent, an SBA Certified Development Company loans 40 percent, and an independent lender finances 50 percent
  • Joint venture loans, in which at least two properties apply for financing and share the risks and rewards of the commercial venture
  • Bridge loans for short-term money at a higher interest rate, until long term financing can be secured
  • Soft money loans, in which online markets pair investors with commercial borrowers for short term loans at rates higher than conventional rates but lower than bridge loan rates

Financing residential or commercial real estate requires significant knowledge of the real estate market and available financing options. At Sparks Law, our real estate attorneys can help meet the strict application requirements and seek out the best deal for the project at hand.

Real Estate Loan Repayment Terms

Residential real estate loans traditionally are amortized over 15 or 30 years, with interest rates at historic lows in recent years. Commercial loans are usually repaid in five to 20 years, with an amortization period often longer than the loan term. For instance, a commercial loan that is issued for ten years but amortizes over 20 years means a purchaser makes payments for ten years based on the loan being paid off in 20 years.

At the end of ten years, the borrower makes a final payment on the balance. These terms affect the amount a commercial lender will charge an investor and can be negotiated by a competent real estate finance attorney.

Contact an Alpharetta Real Estate Finance Lawyer Today

Whether you are looking for a home mortgage or a commercial real estate investment, you must secure financing that fits the situation. Let an experienced attorney advise you and advocate for your best interests.

At Sparks Law, our team is skilled in negotiating commercial finance and working with residential lenders. An Alpharetta real estate finance lawyer is a phone call away, so call for an initial consultation.