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YOU
CAN GET THE BEST IN FINANCIAL SOLUTIONS
 Everyone
wants the best of whatever they pursue. When you begin your
search for a loan for church construction, buying a new
church, or to renovate an existing building, you want the
best that is available to you. There are special features
of a church loan that few know about, but if you knew were
available somewhere in the financial markets your church
would never accept anything less.
You want the best … we all want the best that is available
to churches. What is the best and how do you secure it?
Most
lenders limit church loans to amortization periods of 20
years and only occasionally offer 25 year amortizations.
If you could get a 30 year amortization on your church as
you can on your home your monthly and annual payments would
be substantially less. This would allow you to borrow more
if needed or to more easily qualify for your current loan
amount. A longer amortization will result in a lower debt
to income and a better cash flow capacity than a shorter
amortization. On a $3 million loan the difference in payments
between a 20 and 30 year amortization alone is over $40,000.
That is substantial. Why take something less when you can
get the best.
Why
wait to fix your permanent loan until the close of construction
when you can fix it at the beginning of construction and
save big time! A construction loan really has two parts
to it; construction and permanent. Many lenders lure churches
with an adjustable rate during construction while their
fixed raters are a percentage point or more higher. While
construction is underway rates are likely climbing on variable
and fixed loan rates. Once construction is over the lender
transitions from construction to permanent financing. But
by now the fixed rates are substantially higher than when
construction began and compared to the variable the church
has been accustomed to can be tantamount to sticker shock.
You need a lender to fix the permanent financing at the
beginning of construction, not at the end. Why take something
less when you can get the best.
Lenders
that don't understand the unique characteristics of churches
will make the experience of getting a church loan feel more
like an IRS audit. Ouch! Many lenders will penalize or limit
the freedom of the church going forward by either requiring
personal guarantors for the loan amount or will impose pre-payment
penalties to make it difficult to refinance somewhere else.
Many lenders offering a five (5) year fixed rate will use
a decreasing penalty schedule for each year from 5% - 1%
of the remaining balance. You don't need personal guarantors
and you don't want pre-payment penalties. Avoid both!! Why
take something less when you can get the best.
Are
you looking for a "yes," or do you want the best
"yes?" Many churches feel so desperate about ministry
lending they are willing to take any terms or restrictions
that a lender imposes just to get the loan. Churches are
a great credit risk in the financial markets and there is
no reason to go to a loan officer with head hung low. Wouldn't
you like the confidence that you are getting more than a
reluctant "yes," but that you are getting the
very best "yes" available from lenders who really
want to serve your church? Why take something less when
you can get the best.
Article
by: Jack Dennison
Church
Financial Services
5376 Tomah Drive, Ste. 101
Colorado Springs, CO 80918
o-719.528.5709
f-719.265.5902
c-719.332.0382
JackD@ChurchFS.com
www.ChurchFS.com
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