Some Facts About HUD Commercial Loans

Refinancing Multifamily LoanA Housing and Urban Development (HUD) commercial loan is a reliable financing opportunity, especially if you are planning to build an apartment complex or a housing project of considerable commercial scale.

The FHA is the agency tasked to insure HUD-issued loans. If the borrowers default on such loans, it is the government that repays the lender.

Working with an FHA-approved lender and appraiser

It takes time to secure HUD commercial loans. Bonneville Multifamily Capital notes that one needs to apply from an FHA-approved lender to get a loan. More so, the property the financing is for must also meet FHA guidelines.

But before all else, one needs a comprehensive appraisal from, again, an FHA-approved appraiser. Appraisers are professionals that have specifically trained, unlike the typical home surveyor.

They know the process and strategies to have a property approved by the FHA as well as the requirements a lender would need from a developer.

Going through the appraisal process

An appraiser normally would inspect a property’s condition, from the floor to the roof. After a judicious inspection, a report is then made. This would include an assessment, visual evidence and recommendations in case there are repairs needed.

Repairs should come first before a lender reviews the application. Although other appraisers can do the job, an FHA-approved and licensed appraiser makes the application smoother and less problematic as they can easily identify areas that need rectification before submitting the application.

A caveat

Government-backed loans come with very low interest rates, but processing time is a problem. An issue with HUD-issued loans is the amount of time an application would take to reach closing. HUD processes all the applications; the sheer demand can overwhelm them.

Refinances under HUD are generally quicker to secure. But, a loan for new construction can actually take up to nine months from application to closing.