Freddie Mac SBL Loan Agreement: What You Need to Know
If you’re a real estate investor looking for financing options, you may want to consider a Freddie Mac Small Balance Loan (SBL) Agreement. This loan product is designed specifically for small multifamily properties, with loan amounts ranging from $1 million to $7.5 million. In this article, we’ll provide an overview of the Freddie Mac SBL Loan Agreement and what you need to know before applying.
What is a Freddie Mac SBL Loan?
A Freddie Mac Small Balance Loan is a type of mortgage loan that finances the acquisition or refinancing of small multifamily properties. This type of loan is ideal for investors looking to purchase or refinance properties with five to 50 units. The maximum loan amount for a Freddie Mac SBL is $7.5 million, and the minimum loan amount is $1 million.
Benefits of a Freddie Mac SBL Loan
One of the biggest benefits of a Freddie Mac SBL Loan is the competitive interest rates. The interest rates on these loans are typically lower than other commercial real estate loans, making them a great option for investors looking to save money over the life of the loan.
Another benefit of a Freddie Mac SBL Loan is the prepayment flexibility. Unlike other commercial real estate loans, Freddie Mac SBL Loans have no prepayment penalties, which means you can pay off the loan early without incurring any fees. This can be a significant advantage for investors who are looking to sell their property or refinance in the future.
Eligibility for a Freddie Mac SBL Loan
To be eligible for a Freddie Mac SBL Loan, you must meet certain criteria. The property must be a multifamily property with five to 50 units, and it must be in good condition and located in a market with strong fundamentals. Additionally, the borrower must have a minimum net worth of the loan amount and a minimum liquidity of six months debt service.
The application process for a Freddie Mac SBL Loan involves submitting a loan application, a credit report, and supporting documentation such as a rent roll and operating statements. The process can take several weeks to complete, but once approved, the funds can be disbursed relatively quickly.
Conclusion
A Freddie Mac SBL Loan can be an excellent financing option for real estate investors looking to purchase or refinance small multifamily properties. With competitive interest rates, prepayment flexibility, and eligibility requirements that are less strict than other commercial real estate loans, this loan product is well worth considering. If you’re interested in applying for a Freddie Mac SBL Loan, speak to a qualified lender to learn more.