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Church Loans, Church Financing
Church loans are a totally different segment of the commercial mortgage industry. Both from a financial mentality, as well as a "mission" perspective. Church leaders, do not live by the corporate goals of higher leverage = higher potential ROI, at the expense of all else. Church lenders too, though still very interested in the protecting their capital, also are normally passionate about the churches greater goals of spreading their religion and growing their congregation. This interest, in something beyond just return on investment, is totally foreign to all other sectors of commercial finance. The way church loans are examined and underwritten are also very different. Lenders/banks/and private sources of church capital are not limited to the typical finance "box". Most sources of church financing hold onto their loan long term, on their own balance sheet. Because they make the funding decision and hold onto the debt, often for the life of the loan, the underwriting standards are completely to their discretion. Your typical commercial mortgage is completely opposite to that. If the loan does not fit the "box" and can not be sold onto the secondary market, it is almost impossible to get it funded (especially in this current credit crisis). Church Financing - How We Can HelpWe provide church loans throughout the nation, from $500,000 to $35,000,000. We work on purchase, expansion, construction or refinance transactions. Because of our experience and length of time in the industry we have many unique programs we can offer you. 25 Year Fixed Loan Church LoanFor example, one of our most popular church loans is a 25 year fixed program (with no prepayment penalties) for loan over $1,500,000. This is an exceedingly rare program as virtually all commercial loans are now capped at a 5 year fixed (due to the credit crisis). This program is for virtually all transactions types, including purchase, construction, and refinance. The main benefit of course, is that the borrower does not have to be concerned with having to refinance the debt in the typical 5 year time frame, and being at the mercy of future interest rates. Many borrowers do not want to play the "rate game". From a historical perspective interest rates are still at 20 year lows... Borrowers considering a 5 year fixed program, for example, should contimplate, where interest rates will be in the future. Most experts agree that they will likely they will be higher, as inflation is "looming' around. For example, The Prime Rate is currently at the lowest level it has ever been in the history of our nation... It is currently at 3.25%. In the 1970's it was in the low 20%'s... The other component of this, which is less speculative, is the actual cost to refinance a church loan. Lets use an example to demonstrate this point. And say, your current balance is $2,000,000 and that you are comparing a typical 5 year fixed vs our 25 year fixed program.
As you can see the life time savings, just in terms of closing cost with the 25 year fixed program is a whooping $111,200... What borrower will find is that the 25 year fixed loan interest rate is higher (normally .5% - 1%) than the typical 5 year fixed loan. This is due to the increase in risk for the funding lender, as their costs of capital (ie their rates) are not fixed. Many borrowers still elect to go with the 25 year fixed loan in an effort to 1. limit their total life time closing costs and 2. to reduce their risk of having future rate increases.
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