Financing Residential Real Estate
For a residential purchase in New York State, the law allows 45 days for someone to get financing in place – but that doesn’t mean you want to wait to secure financing until you’re in contract negotiations. In fact most times, and especially in the 2022-23 market, a seller won’t even allow you to look at their home unless you can show them a pre-approval letter from a lender. This pre-approval letter will state that you as an individual, a couple, or a corporation, have the financial means to purchase the property.
|The Pre-Approval Letter
A pre-approval letter is not the same as a mortgage commitment – it only states you are financially sound. In other words, this letter shows that a lender has checked to make sure you don’t have any problems with your credit and that you have sufficient income to make your monthly payments.
After we have established that the person who is interested in purchasing the property is pre-approved, the property itself will be checked during the 45-day term. This step of the process includes verifying answers to questions such as:
- Can the seller legally sell the property?
- Is the property sellable as is?
- What does the property appraise for?
- (We have to make sure that the property will appraise for enough money to satisfy the seller and the lender.)
- And more…
Financing Commercial Real Estate
Commercial real estate financing is a bit different…
It’s often a little harder to get financing for commercial property. This is because commercial property financing requires looking at more factors, including:
- The individual that’s purchasing
- The individual that’s selling
- The property that’s being sold
- The business that’s incorporated into that property
- The environmental assessment of the property
- And more…
In other words, will the commercial property generate enough income to support the payments that the lender may want? The time required to verify a buyer, a seller, the property itself, and the property’s income might take 60 to 90 days before a mortgage commitment can be obtained.
In New York State, you must have an environmental impact search done on a commercial property before being able to finance it.
These assessments can include one to two phases, depending on the property in question. If the assessor finds something that needs further consideration in the first phase, a second phase of inquiry will be triggered.
Finding Financing Through Your Real Estate Attorney
In New York State, every attorney has the right to assist you in obtaining financing. The best way to do this is to work with an attorney who can assist you in getting a pre-approval ahead of time. Then, when you do get your commitment letter, your attorney can assist you in fulfilling the contingencies attached to it. These contingencies are things that the lender needs to see done, usually having to do with clearing objections in the title report.
Finding financing for commercial property is more complicated because the lender’s attorney has to make the case to their employer (the lender) as to why they should approve the commercial loan. In other words, the lender’s attorney has to provide their opinion letter, which states that they have looked at the organization buying the commercial property.
So, whether you are buying commercial or residential real estate, having an attorney on your side to help you secure financing is one of the best ways to make sure that you get the outcome you are looking for.
With the guidance of a skilled attorney for Real Estate Law Cases, you can have the peace of mind that comes with knowing that we’ll make it look easy.