GMAC COMMERCIAL MORTGAGE

GMAC was founded in 1919 as a wholly owned subsidiary of General Motors Corporation. It was originally founded to provide GM dealers with the financing necessary to provide and maintain vehicle inventories and to provide customers with a means to purchase vehicles. The company has since expanded and now includes three primary business units: automotive financing, real estate financing and insurance.

A mortgage is lien or encumbrance on property. A mortgage is usually sought for new money, but is has become the generic term for a loan secured by property. A GMAC commercial mortgage is generally structured as a long-term loan. Periodic payments are similar to an annuity and calculated according to the time value of money formula. The time range is generally from ten to thirty years. GMAC commercial mortgages provide funds against property to earn interest income, and generally borrow these funds themselves by taking deposits or issuing bonds. All types of real property can, and usually are, secured with a mortgage and bear an interest rate that is supposed to reflect the lender’s risk. The price at which lenders borrow money affects the cost of borrowing.

Fixed rate mortgages carry an unchanging interest rate for their entire term. They allow you to lock in rates when they are low, but if the rate should go down, you are stuck with the initial rate. GMAC commercial mortgages start with fixed rates for three to five years, and then switch to variable rates for the remainder of the mortgage. This is sometimes called a two-step loan. This keeps payments predictable at first; delaying any fluctuations until you are better able to handle them.

You can also get a GMAC commercial mortgage as an “interest only” loan. This simply refers to making payments exclusively towards the interest for the first three to five years. This reduces your monthly payments so that you can concentrate on improving your cash flow. Since you’re not paying anything on the principal, your monthly payments will be considerably larger once the interest-only period ends.

If you need to stretch your money, you can apply for a GMAC commercial mortgage with a balloon payment. This shorter-term loan, which can range from 5 to 15 years, requires small monthly principal and interest payments. You can then use your immediate cash flow to grow your business. Your last payment, or balloon installment, includes the remaining interest and principal on the loan and can amount to tens of thousands of dollars or more. Balloon payments are risky for any business, particularly if you are applying for a GMAC commercial mortgage for the first time. The borrower anticipates growth will occur. However, it may not come on the same schedule as your balloon payment. To avoid problems, you can either negotiate for a lesser balloon payment before agreeing to the loan, or roll the balloon into a new GMAC commercial mortgage with better payment terms.

Businesses seek GMAC commercial mortgages to buy land to construct a new building, to by an existing property or business, or to acquire multi-unit properties so you can rent space to businesses or individuals.