Financing Options
Mohammad, Hafeez A
http://groups.google.com/group/isfmasjid/files?hl=en
The mode which Br. Mike is referring is attached t Google groups link shown above.
Letter from Mike A. (LaRiba)
Alsalam Alikum;
As discussed, construction financing is not possible for us to do. Instead, the Bank of Whittier is able to provide the financing amount needed in the form of other loans. These could be in the form of personal loans or business loans to members of the community against their own collateral and based on their own incomes. The members of the community would then have separate agreements with the Foundation to reimburse them. The loans can be home loans, business loans (against professional practices such as medical or dental clinics) or commercial real estate (offices and shopping centers). The financing guidelines differ based on the type of collateral used as the basis for the financing. For example:
1) Financing secured by RESIDENTIAL properties- term can be up to 30 years, rate of return can be FIXED based on rental values, maximum loan-to-value is 70%.
2) Financing secured by COMMERCIAL properties – Term can be up to 20 years (but due after 5-10 years)., rate of return is VARIABLE, maximum loan-to-value is 60-65%
3) Financing secured by BUSINESSES/professional practices – Term can be up to 5-7 years, rate of return is VARIABLE, maximum loan-to-value is 60%.
Also as discussed, if the Foundation is buying a property, we can finance up to 65% of the purchase price. We will need 3-5 members of the community to co-sign as applicants on the financing. We can break up the amount of the financing into 3-5 tranches for each co-applicant to limit their obligations and the impact on their credit. Each tranche can be for a different amount based on the co-signer’s credit and ability to pay.
In general, financings based on residential properties carry the lowest rate of returns which are approximately 3.75% to 4.5% today; and rates are FIXED for up to 30 years. Financings based on businesses or commercial real estate offer a variable rate of return and start at approximately 5.5% to 6.5% today.
The rates of return are determined based on the rental value of the property/business used as collateral. We make sure that the rates of return are competitive with traditional market rates.
I am happy to attach the LARIBA model of financing used by both LARIBA and Bank of Whittier.
Please feel free to contact me with any questions or comments
Yours truly;
Mike Maguid Abdelaaty
Mike Maguid Abdelaaty
President and COO
(626) 348-4393 cell
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