Tag Archive for: real estate

Commercial Lending…What Not to Do!

I have been practicing residential financing for over 30 years and commercial financing for over 20 years and have provided commercial financing on Multifamily (Apartments), Office, Retail, Medical (Dental and Doctor Offices) and Light Industrial properties (data storage units and auto dealerships).

During that time, I have witnessed that residential interest rates were always lower than commercial rates until the Federal Reserve started raising rates in January of 2022.  In looking at the current interest rate market, residential rates are varying between 6.5% to 7.5% depending on the loan amount, ltv, fico’s, property type and points paid, etc.  Commercial lending on the other hand has ranged recently from 5.5% to 6.5% depending on loan term, property types and points paid.

Most Important…

Commercial loans all have prepayment penalties (where residential loans do not) and they usually follow the term of the loan so they tend to not only be costly (if one breaks them) but they also tend to be very long in duration!

For Example…

  • 5 Year Fixed Loan (on a commercial loans) have a 5 year prepayment penalty that works like this with a 5-4-3-2-1 Prepay.  Year 1 of loan, the loan has a prepayment of 5% of the loan amount if the loan is paid down or paid off.  Year 2 is 4%.  Year 3 is 3%.  Year 4 is 2% and year 5 is 1%.  After the 5th year of 61 months out, the prepayment penalty drops off.
  • 7 year fixed with 7-6-5-4-3-2-1 Prepay…Year 1 of loan, the loan has a prepayment of 7% of the loan amount if the loan is paid down or paid off.  Year 2 is 6%.  Year 3 is 5% and so on like the 5 year fixed.  There’s also 10 and 15 year fixed loans.

So…Here’s the Million Dollar Question…Why is it so Important in This Market to Not Have a Prepayment Penalty on a Commercial Loan?

AnswerIf you have a prepayment penalty on your commercial loan and rates drop, then how is one able to refi without breaking the terms of the loan and paying the prepayment penalty?  There Isn’t.  All you can do is a get a loan with a shorter prepay if one exists.

“Voila”We have that option and banks like Chase, First Republic, Heritage to name of few don’t!

Last week we had a client with $2m dollar commercial loan that was comparing us to another lender and our rate was .5% higher in rate than the other lender or $650 per month more, but our prepayment on 5 year fixed was a 2-1 and theirs was a 5-4-3-2-1.  On $2 million in loan amount, year 2 (let’s say 18 months out after closing, rates drop) and the client wants to refi.  The client then pays $80k for the prepayment penalty with the other lender.  Our lender charges $20k plus the spread of the monthly payment equal to $650 or $11,700 at the 18th month or $31,700 in total.  The other lender charges the client $80k.  Hmm…$31,700 from our lender or $80,000 from the other lender with the lower rate.  Our option would save the client $48,300.  Again, which option is better?  Which lender should the client use??  Us or them???

See the logic of going with a lesser prepayment even if the rate is higher by a tad?  Having the lesser term or prepay is the logical way to go.  Unfortunately, this client was fixed on one thing…the rate where I was focused on the long term solution…Flexibility and the probability of lower rates and payments in the future, per this report from Morning Star, a publication that definitely is the closest to a crystal ball!

In Closing…

In the world of commercial lending just like residential lending there is more to just making a decision solely on the rate as illustrated above.  If you want our help and sage experience in making the best decision when it comes to choosing a loan product or making a financial decision, please contact us.

Below is a List of What we Do:

BTW...if you’d like to review my current market report, please go here.

All the Best,

Rob McCarthy

Senior Mortgage Advisor


650-465-8957 c  408-377-4123 o  408-608-1921 f

CA DRE #01165697  NMLS #121019

101 Loan – 6090 Hellyer Ave #100, San Jose, CA 95138

Note: Interest rates and loan programs quoted are subject to change without notice or until locked and approved by lender.

Eight Myths About Estate Planning

One of the Most Important Things Every Family Should Have…

As your wealth increases or your family expands, its so important to have an estate plan also known as a living trust that not only reduces your tax liability as life events occur but also dictates what is to occur when a life event happens.  For more info on estate plans, please see below or contact me for a referral in your area or based on what you are looking to do.


All the Best,

Rob McCarthy

Senior Mortgage Advisor


408-377-4123 o  650-465-8957 c   408-608-1921 f

101 Loan – 1601 S De Anza Blvd, Suite 260, Cupertino, CA 95014

CA DRE #01165697  NMLS #121019


Eight Myths About Estate Planning

Somita Basu – Partner-Norton Basu LLP 

www.nortonbasu.com 408.850.7250 sbasu@nortonbasu.com

Myth 1: Everyone knows they need an estate plan.

This may seem like common sense, but as we know, common sense isn’t so common. The
majority of all Americans will die without an estate plan of any kind in place. Many people don’t
want to think about their eventual death or leaving their loved ones behind. But less than half
of all Americans have an updated estate plan that accurately reflects their wishes. The lack of
an updated estate plan results in the inefficient transfer of assets and incurs legal costs, trauma
for the beneficiaries, and expensive delays.

Myth 2: I don’t have an estate!

The word ‘estate’ can conjure up visions of castles, mansions, and the American version of
Downton Abbey. But in the context of estate planning, your ‘estate’ consists of everything you
won, no matter how little or how much. Anything you own in your name as an individual (or
jointly with a spouse or partner) is part of your estate. So, yes, you do have an estate. The
question is who decides what happens to your estate? You or the state of California?

Myth 3: I only need to worry about who gets my house.

Given Bay Area real estate prices, it’s natural to focus on what will happen to your house when
you die. Which child should get the house? Who should be able to live in it? Should rent be
paid? But you need to worry about more than just your house or rental properties. You also
have to consider your bank accounts, investment accounts, and even sentimental pieces of
property – maybe a book passed down for generations, wedding jewelry, or even photographs.

Myth 4: I’m not old enough to need an estate plan.

As soon as you turned 18, you needed an estate plan. At that age, an Advanced Health Care
Directive and Power of Attorney should be completed. When you become a legal adult, your
parents no longer have automatic access to your medical information or your assets. They will
need validly executed and notarized legal documents to help you should the need arise.
Remember, the components of an estate plan will vary with each individual’s need. It’s never a
one-size-fits-all option.

Myth 5: A will and a trust are similar.

A will and trust are only similar in that they both direct the disposition of your assets after your
death. But a will MUST go through the probate process in California while a properly funded
trust avoids court supervision in the vast majority of cases.

Myth 6: My will is a private document.

A will is a private document while you’re alive. But once you die, the original Will must be
lodged with the probate court. This Will then becomes a public document. Anyone can access
this document and your beneficiaries can definitely expect multiple calls from realtors,
investigators, and others. A Trust by comparison is a private document available to only your
beneficiaries and direct relatives. The only time a Trust becomes public is if litigation is

Myth 7: My agent can use my Power of Attorney after I die.

So many people seem to believe the Power of Attorney document allows access to their bank
accounts even after they die. This is simply not true. The agent acting under your Power of
Attorney only has access to your bank accounts and financial information while you are alive.
Once you pass away, anyone who requires access to your accounts will need court approval or
must be acting as Trustee of your trust. Either way, legal documentation will be required.

Myth 8: I can do my estate plan online with no problem.

Online estate planning packages have serious deficiencies. The legal language is faulty and
multiple legal issues are not addressed properly. But those are technical issues. The question is,
do you want your assets to pass to your beneficiaries as smoothly as possible or do you want a
one-size-fits-all option you can complete online without the advice of an experienced attorney?
Ask yourself, if you found a lump in your lymph node, would you Google the treatment or go to
a specialist and get tested and follow a prescribed treatment plan? Don’t leave something as
important as your legacy to an algorithm. Talk to an experienced estate planning attorney.

Unemployment Down in Bay Area and Real Estate Staying Strong…

A Very Interesting Week for Real Estate, Unemployment and the Dow Jones!

This week, see why the economy is coming back strong. For more info, see https://youtu.be/7DaDcWhDUdg.

Home Values

Real Estate values continue to stay strong, with multiple offers as Shelter in Place has been modified.

Just this week, we pre-approved over twice as many borrowers as with previous weeks.  Many of my Realtors are reporting buyers coming off the fence and writing offers.  Housing inventory is finally up with Shelter in Place in Phase 2 allowing Realtors the ability to list property.  Inventory is now at 2.8 months but with over 7 Million people residing in the bay area, that isn’t much!  This is great news for sellers, but not so much for buyers where supply and demand are not equal.


Bay Area unemployment wasn’t as high, as some expected, compared to other areas throughout California.  Marin County came in at 11.1.  San Francisco County at 12.6, San Mateo County at 11.4 and Santa Clara County at 11.7.  What is also interesting is national unemployment dropped from 15.3 to 13.3%.  In just one month, over 2.5m people went back to work which is great news for the economy!

Local, National and Global Markets

The Dow closed today at 27,110 due to the following:

  1. Economic Optimism
  2. Overwhelming Policy Response
  3. Corona Virus Uncertainty Abating
  4. Global Yields Increasing

For more info on these, see my weekly report which can be found at www.101Loan.com under Rob’s Corner.

In Closing…Noah Manning with Perspective Realty in the North Bay and myself provided a summary on the above (and more) at https://youtu.be/7DaDcWhDUdg.   (I hope you enjoy it and if you like it, please leave your comments on the channel)

I hope you have a great weekend!

All the Best,

Rob McCarthy

Senior Mortgage Advisor

408-377-4123 o  650-465-8957 c   rob@101loan.com

101 Loan – 14435 C Big Basin Way, Saratoga, CA 95070

101 Loan LLC – CA DRE #01165697  NMLS #121019


  1. Residential Financing for Purchases and Refinances on 1 to 4 unit properties.
  2. Reverse Mortgage Financing to include Conforming, Jumbo, HELOC Jumbo’s.
  3. Commercial & SBA Financing to include Multifamily, Office, Retail and Light Industrial.
  4. Access to over 50 banks with over 200 “Five Star” Reviews on Yelp, Google, Facebook and Linkedin.

Market Update – Unemployment and Property Values

Good Afternoon,

I wanted to share with you a recent presentation I did, posted on You Tube, about the impact unemployment will have on local housing values compared to the rest of California with the big question in mind…

  • Are we headed towards a Recession?
  • Are we headed into a Real Estate Correction

Feel free to view and share with colleagues, friends and clients.

This Friday, I will be providing a new video and more unemployment numbers that have been recently released and what they mean.  If you need anything, please contact me.  Thanks.


Have a great week and stay safe!

Best Regards,

Rob McCarthy

Senior Mortgage Advisor


408-377-4123 o  650-465-8957 c   408-608-1921 f

101 Loan – 14435 C Big Basin Way, Saratoga, CA 95070

101 Loan LLC – CA DRE #01165697  NMLS #121019


  1. Residential Financing for Purchases and Refinances on 1 to 4 unit properties.
  2. Reverse Mortgage Financing to include Conforming, Jumbo, HELOC Jumbo’s.
  3. Commercial & SBA Financing to include Multifamily, Office, Retail and Light Industrial.
  4. Access to over 50 banks with over 200 “Five Star” Reviews on Yelp, Google, Facebook and Linkedin.

BTW…Interested in learning more about how to Choose a Lender…

Obtaining a mortgage in today’s market for a future purchase or refinance can be a complex ordeal. A top financing professional can be critical in getting your offer excepted, or locking the lowest rates and fees with

the most favorable terms. Below are some questions you will want to ask, to make the best choice in choosing your residential or commercial lender or mortgage originator.

By asking the following questions, we can quickly help determine your goals and financing options…

  • How long will you live in the area?
  • How long will you keep the property?
  • Are you planning on doing any remodeling or adding on to the property in the future?
  • When would you like to retire?
  • Are you after cash flow or paying off the loan as quickly as possible?
  • Plus many more…

Once we have your answers, we will advise on what loan programs are best for you and what loan structure will meet your goals.  This is done at the pre-approval appointment and reviewed again once in contract or when we lock your loan.

How will you help me understand the tax benefits of home financing for the future purchase of a home?    

We will determine your approximate tax write offs, net tax benefit, and net effective payment based on your tax bracket. Then we will compare your current mortgage payment to rent and you the benefit on a monthly basis in real dollars.

What is your process in assisting me so I can get my offers accepted?

We do several things that include providing a pre-approval in ms-word, so then at moment’s notice the Realtor can modify the price of the pre-approval to match any offer if purchasing below or at the original pre-approved amount. We also call the listing agent on each offer to convey the buyers compensating factors and to differentiate the offer from everyone else’s.   Lastly, we will help coordinate short closings and “as is” offers with no contingencies.

For more info, go here, then click on Home Financing Brochure for more info.  Thanks.

Are Values Really Going To Go Higher?

Recently rates dropped, but that didn’t last long. Numerous economic reports (see report below) came out showing positive signs that the economy will “steam” forward coupled with the Federal Reserve’s statement that they have “no plans on increasing rates in 2019” means one thing in the near future…Higher Values and Higher Rates! (Rates tend to increase when the market is doing well) Read more

What We Do is Different!

Some lenders provide great rates but lack service. Some lenders provide great service but lack good rates. At 101 Loan, we provide both but when it comes to making an offer on your behalf, we go the extra mile to ensure your offer is the strongest possible in the eyes of the seller. This includes the following and something most banks, brokers or credit unions don’t offer: Read more

Real Estate Education..

In the last few months, we have been writing and teaching quite a few seminars at local libraries and local companies on the following topics: Read more