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Keller Williams First Atlanta
200 Glenridge Point Pkwy
Suite 100
Atlanta, GA 30342
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Adriana West (Keller Williams First Atlanta): Real Estate Agent in Roswell, GA
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Types 0f Mortgages

Lenders offer multiple types of commercial mortgages. Some are similar to residential mortgages, while others are exclusive to businesses.

Interest-only Loans: refers to making payments exclusively towards the interest for the first three to five years. This initially reduces your monthly payments so you can concentrate on improving your cash flow. However, since you’re not paying down the principal during this time, your monthly payments will be considerably larger once the interest-only period ends.

  • Buydown Mortgage: offers an initial discounted rate that gradually increases to an agreed-upon fixed rate, usually within one to three years.  An initial lump sum payment reduces monthly payments in the first few years of the mortgage.
  • Graduated Pauyment Mortgage (GPM): offers low initial payments that gradually increase at predetermined times, which allows the borrower to qualifiy for a larger loan amount.  Negative amortization occurs in the early years of the loan, but payoff of the principal excelerates during later years.
  • Mortgages with Balloon Payments: This shorter-term loan – which can range from 5 to 15 years – requires small monthly principal and interest payments. This allows you to use immediate cash flow to grow your business. Your last payment, or balloon installment, includes the remaining interest and principal on the loan and can amount to tens of thousands of dollars or more.
  • Fixed-Period ARM: starts out with three to ten years of fixed payments.  At the end of the fixed period, the interest rate adjusts anually.  Fixed period ARMS are often tied to the one-year Treasury Securities Index or LIBOR and have a first-adjustment cap.
  • Two-step mortgage: offers a fixed rate for a time period, usually five to seven years, after which the interest rate chagnes to a current market rate.  After this one time adjustment, the mortgage maintains the new fixed rate for the remaining term.
  • Option adjustable rate mortgage (Option ARM): targeted towards those with variable incomes, such as teh self-employeed and those who receive large year-end bonuses.  Unfortunately, buyers could also use option ARMs to buiy “more house” than they could otherwise afford; in these circumstances, borowers can face default if interets rates rise.

The determining factors are chiefly the length of time the borrower plans to own the property and the amount of monthly payment that is affordable.  As a result of the 2008-9 economic downturn, lenders have tightened lending criteria and loan qualification is subject to increased scrutiny.