Church Real Estate Financing Frequently Asked Questions
Is church financing available?
Church financing is a very specialized form of commercial lending. Because it is so specialized, many financial institutions do not offer financing for churches. Fortunately, there are some good church lenders including a few commercial banks, credit unions, and other lending sources. We can assist churches to find the right financing.
How large a down payment is usually needed?
Often, potential church buyers are surprised to learn that the down payment percentage needed to finance a church property is usually much higher than to buy residential property (25-30%). Many times their surprise is quickly followed by disappointment because they don't have enough funds saved for the down payment required by the lender. One of the first steps in preparing to relocate is financial planning. We can help your church formulate its relocation plan.
Are there benefits to being pre-qualified by a lender?
There are a number of benefits when a buyer is pre-qualified by a lender before viewing a property and writing a purchase offer. The pre-qualified buyer:
1. Is in a favorable negotiating position
2. Saves time and effort in viewing only properties they are qualified to buy
3. Can prevent the embarrassment of being turned down for a loan
4. Avoids placing the sellers' financial security at risk (by needlessly taking the property off the market)
5. Can reduce the escrow time because the loan approval process is already in progress.
Buyers who are motivated will do what it takes to be in the most favorable position to acquire a property. All else being equal, a seller will certainly take the offer of a pre-qualified buyer over one that has not been pre-qualified. We can assist in finding the right lender.
What does it take to qualify for church financing?
Every lender is a little different, but in general a church borrower A) needs to be incorporated, B) have three years or more of financial statements, C) have a good down payment, and D) have sufficient income to make the loan payments. We can assist you in determining the amount you qualify for.
How is a realistic market value determined?
A key component in marketing a property is having a realistic asking price. Through special training and many years of experience, Kathy can establish a realistic market value for church property. Using an extensive database of comparable church properties, along with construction costs and land values, plus public records, Kathy prepares a lengthy report of her opinion of value. On average, the opinion of value is within a very few percentage points of the actual sales price.
How long can it take to sell a church property?
There are many factors that influence the sale of a property -- such as location, price, and building condition and market conditions. Over the past few years, Kathy’s experience has been that it takes an average of about five months to get a church property under contract and about three more months for escrow to close.