(1) How Long does it takes to close a loan?
We can generally give you an assessment of your situation in our first conversation. You can get “pre-qualified” as quickly as 2-5 days. For “Lite- Doc” programs, approval and closing can take place within 3-4 weeks. Full documentation loans that require third party reports such as appraisals and environmental inspections usually takes between 30-60 days to close. Providing us with complete information and documentation early on can speed the process considerably.

(2) What is the monthly LIBOR Index?
LIBOR is an abbreviation for the “London Interbank Offered Rate”. Similarly to the Fed Funds Rate, it represents the rate at which banks are willing to loan each other reserves. The LIBOR is an average of the rate charged on dollar- denominated deposits traded between banks in London. LIBOR is quoted for specific terms as opposed to the Fed Funds Rate that is indicative of overnight loans between banks. A lot of short-term debt or “floating-rate” debt is priced off the LIBOR yield curve. It is an international standard for interest rates. LIBOR is expressed as 1-month, 3-month, 6-month and 1-year rates.

(3) What is a yield maintenance prepayment penalty?
All of the conduit programs have this type of prepayment penalty because the paper is sold to the bond market and those bond holders have purchased a 10 year bond in which they are paid part of the monthly mortgage payment. Therefore, the yield maintenance prepayment penalty basically is all of the interest payment due on the loan which is what the bond holders bought for that fixed period of time. A more simple way of stating this is that if the borrower wants to refinance the property they will have to pay all of the interest on the mortgage left on the balance of the note to pay off those bond holders. However, a mortgage is assumable for 1% by a new qualified borrower if the currently owner wants to sell the property.

(4) What is a lock period?
Usually for 4 years it means the borrower can not refinance the property for that period of time. However, the property can be sold at any time because the loan is assumable for 1%.

(5) Do you provide loans throughout the United States?
Yes. We lend on commercial properties typically located in metropolitan areas, ie., cities and larger suburban areas.

(6) Who are your lending sources?
Our sources include private investors, pension funds and hedge funds.

(7) What is a CAP Rate?
A measurement of the rate of return on an investment. NOI divided by purchase price. NOI/Cap Rate = Value.

(8) What is Net Operating Income (NOI)?
Gross rent/income less expense = NOI.

(9) What is Debt Service Coverage (DSC)?
Divide the NOI by the annual debt service (P&I x 12).

Advance Commercial Financing LLC Est. 2008

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