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1st Trust
Deed – There are three primary types of 1st TD loans. They
are:
Permanent – A
permanent loan is one with a longer term, generally 5-30
years, with a fixed or variable interest rate.
Example:
An investor buying a medical office building with plans to
own it for the long-term would obtain a permanent loan.
Construction – A
construction loan typically has a term of 1-3 years,
includes reserve accounts to fund various project costs as
well as interest payments, and has a floating interest rate
consisting of a margin over Prime or LIBOR. A construction
loan is repaid either through a sale of the property or
through a refinance into a permanent loan.
Example:
A real estate development company with plans to purchase
land and build a new retail center would obtain a
construction loan to complete the project.
Bridge – A
bridge loan is similar to a construction loan. They are
generally short term in nature, include reserve accounts to
fund project related expenses and has a floating interest
rate consisting of a margin over Prime or LIBOR. This type
of loan is repaid through a sale of the property or through
a refinance into a permanent loan.
Example:
A real estate developer wishing to acquire an office
building with high vacancy in order to renovate it and lease
the vacant space to new tenants would take out a bridge loan
to complete this project.
If you
require additional information, or would like to speak
to one of our commercial financing specialists, please call
us at 888.488.3807 or
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