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Local Business

Three important things to know about commercial loans

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Most people are familiar with mortgage loans, but how do they differ from commercial loans?

Commercial real estate loans are obtained for funding businesses such as multi-family apartment properties, office buildings, retail centers and restaurants. These types of loans can also be used to start up a new company, purchase new equipment, perform repairs or fund new construction.

These types of mortgages vary from residential home mortgages.

There are three important facts to know when you begin the process of obtaining a commercial loan.

1. When an application for a home mortgage is reviewed, the loan officer focuses on credit history and personal income. Obtaining a commercial loan requires more than a strong credit history and financials.

Although these two areas still apply for commercial loans, the lenders also take into consideration the condition of the property and its capability to service the loan along with day-to-day operations.

2. Commercial real estate loans are sourced differently.

Portfolio lenders are usually made up of national and local banks, such as FNNB Bank. Whether you’re building, expanding or refinancing existing commercial properties, FNNB Bank offers loan products tailored to your specific needs.

3. The terms of a commercial loan are different from a single-family, owner occupied property.

When you take out a mortgage on your primary residence, you can put a small percent down and still receive a competitive interest rate.

With a commercial loan, you will need between 20 and 25 percent down. Unlike a traditional 30-year fixed mortgage, you may also have to select a 3, 5 or 7-year adjustable rate option. Commercial loans can also require a minimum loan amount.

If you are considering a commercial loan purchase, the experienced mortgage lenders at FNNB can provide you with a good faith estimate to get you started.

FNNB Bank: 100 N. 2nd Ave. W., Newton, IA 50208: 641.792.3010: www.fnnbbank.com