Planning effectively for all costs associated with your commercial property purchase can help you manage your finances more effectively. Third-party commercial mortgage costs can sometimes come as a surprise to novices in this area. Here are some of the most important third-party costs that may be included in your commercial mortgage loan.
Title Insurance
Designed to protect you and your lender against defects in the title to the property you are purchasing, many mortgage lenders require title insurance policies. The costs of these policies are usually wrapped into the overall cost of your loan. If financially feasible, however, you may be able to pay for the cost of title insurance upfront at closing.
Appraisal Costs
Commercial real estate appraisals are required to determine the amount you can borrow to purchase a particular piece of property. These appraisals are generally performed by an independent company to ensure that they are unbiased and accurate. The fees for these services may be included in the amount of your mortgage loan or paid by you at the time of closing.
Survey Charges
If you are purchasing property on which to build facilities or commercial premises, a survey may be required to determine the precise size and dimensions of the real estate parcel. These surveys provide added information on the property lines and geological features present on the parcel of land to be purchased.
Professional Business Valuation
As part of the commercial mortgage application process, you may be asked to provide information for a professional business valuation. These processes are designed to determine the precise monetary value of your company or practice for lending purposes.
By participating in and paying for these services, you can sometimes qualify for a higher dollar amount or a lower interest rate for your commercial mortgage loan. You will be expected to pay for these business valuations either at closing or as part of your mortgage loan
Business Credit Reports
Your lender is likely to pull your business credit reports to determine both your ability to repay your mortgage and the likelihood that you will do so. You will be asked to pay for these costs as a part of the overall commercial mortgage process. The expense involved in these procedures will depend on the number of reports pulled by your lender before your approval.
Flood Certification
Depending on the location of your property, you may require flood certification to ensure you can obtain insurance at a reasonable rate. If you do require a specific flood insurance rider, your lender may require you to provide proof that you can obtain this coverage prior to closing on your commercial mortgage loan.
Filing and Recording Fees
At closing, you will also be assessed filing and recording fees associated with the cost of filing your deed with the local courthouse. These charges are generally fixed by the county in which your deed and other documents will be filed.
By taking a little time to determine the amount of money you will be expected to pay at closing, you can plan for these expenses and can ensure that your commercial real estate transaction goes smoothly and according to plan.
If you are in the market for a commercial mortgage loan in Arizona, California, Idaho, Nevada, Oregon or Washington, contact ReProp Financial today!
