CAI-NJ June 2022 Community Trends

The Top FAQ for a COMMUNITY ASSOCIATION BANKER By Jessica Marvel, EBP, National Cooperative Bank

1. Term Loan This is a loan where the funds are taken at closing and the monthly payment is fixed during the life of the loan. The terms can range from 3-15 years depending on the loan size, capital improvement, and the needs of the association. 2. Draw to Term Loan Some associations have capital improvement projects that may take 12-18 months to complete. An option banks offer is called a draw down period. During this draw down, the association borrows what they need and pays interest only on the amount drawn down. At the end of the draw down period, the loan is converted to a fixed term loan and interest and principal payments are required. Benefits of a Loan • Cost savings for associations because all work can be completed at once. • No immediate impact on owner equity • Does not impact current reserve balances n What types of loans are offered for capital projects and what are the benefits of a loan for a community association?

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