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My Loan is Due!

Economy & Politics

What can I do to ensure my loan can be refinanced by my current lender or a different lender? What if my property value is substantially less than when I bought the property? My rents are down, expenses are up, and my Net Operating Income is down. Help! What can I do?

Don’t panic, yet! Here are some things to do to ensure your best opportunity to refinance the loan:

  1. Review the mortgage to assess your current terms and determine if there is a prepayment penalty. When does the note expire and when is the balance due?
  2. Review the amortization schedule, and get the remaining balance. This process will take some time; don’t wait until the last month to start conversations with your lender. It could take 90 to 180 days to complete this process.
  3. Determine the strategy: Refinance current debt? Need money for building upgrades or tenant improvements? Know the amount you need to service the debt and complete any necessary repairs or upgrades to the property.
  4. Get the right “teammates” on the bus. Title Company, Mortgage Banker, and Real Estate Attorney. Assembling the right team will be a strong asset in the process.
  5. What documents will you need? Probably a current survey, rent roll with lease expiration, title work to determine any issues with the title, and updated environmental permits if applicable.
  6. Review expenses and determine if property taxes have been protested and insurance policies updated. Competitively bid insurance to get the lowest possible rates. Every dollar saved in expenses will go straight to the bottom line. The more documents that are ready to go, the quicker the process will move along. Have it all together so when documents are requested, they will be available to deliver to the Lender.

Will all these items be necessary to refinance? Most will, and by going through this process you will be up-to-date with all documents required by the lender to refinance the loan. You will also give yourself the best chance to achieve a successful refinance.

What are your concerns about refinancing? 

Walt Arnold, SIOR, CCIM

Walt Arnold, SIOR, CCIM

serves as Managing Director for Sperry Van Ness/Walt Arnold Commercial Brokerage, Inc. in Albuquerque, NM. Walt began his real estate career in 1989. He specializes in sales/leasing of office and industrial buildings.