In a financially insecure environment, an environment where state budgeting and financing for hospitals may be influenced by issues such as a change in the governing party, a change in the state priorities or anything like this, it is important to know that, while on one hand your sources of financing are variable, including here the possibility that sponsorship contacts may be less important in some years, your financial obligations remain stable and are not subject to modifications. A second important advantage for the two types of conventional mortgage schemes I have mentioned is the fact that they seem to be more addressed to long-term activities than the adjustable rate conventional mortgage. Indeed, the adjustable rate advantages people who will prefer to change their asset after the first years and will benefit form the lower interest rate and lower overall payment rates in the first few years when the asset will be used.

On the other hand, corroborated with the stability argument previously mentioned, a long-term investment goes hand in hand with a long-term mortgage loan, either of the two. A hospital is the best example in this sense. Generally, a hospital may be regarded as a non-profit organization, where the humanitarian mission often overcomes the profit one. In this sense, it is clearly that building and operating a hospital is a long-term activity where a stable financial situation is primordial. A secure payment, where all information is available for the entire period the loan is made, is probably the best solution.

In terms of percentage financing available, the limitations are dictated by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corp. These are in the amount of $300,700, with $451,050 for Alaska and Hawaii. These restrictions may somewhat limit the extent to which the conventional mortgage financing can be used and will include a lesser list of projects because of this amount.

In this sense, the actual long-term debt solution is very much determined by...

An extension of the available space or the construction of a smaller building on the hospital's premises may benefit from the advantages of conventional mortgage. On the other hand, more costly projects, including the construction of entire hospitals from the very beginning, will probably enjoy other forms of long-term debts, including jumbo mortgages, which permit for higher loans.
We may also briefly point out that the conventional mortgage, especially the fixed rate mortgage, also has a rather simplified set of terms of financing, including here the possibility to benefit from a postponement of the beginning of the payment period.

I have suggested the conventional mortgage as the best solution for a hospital because of the financial it can give out to the loaners. The other solutions, including bond emissions, both taxable and tax-exempt bonds, are not to be unconsidered, but they may also involve additional costs and fees that may overall increase the average monthly payment that the hospital will make. I am referring, for example, to the emission costs that may be seriously taken into consideration.

The conventional mortgage, in all its forms, but most notably in its fixed rate format, simplifies the financial projections that the hospital needs to make for the future, while at the same time providing an efficient long-term financing solution, with low costs and high benefits. For smaller projects, projects which can be included in the mentioned margin, the conventional mortgage is an excellent long-term debt alternative.

Bibliography

1. Understanding Mortgage Options. Alpha Mortgage Services Inc. On the Internet at http://www.loanbright.com/alphatoledo/options.htm

2. Conventional Mortgage Program Overview. 2005. FreddieMac. On the Internet at http://www.freddiemac.com/multifamily/conventional.htm

Understanding Mortgage Options. Alpha Mortgage Services Inc. On the Internet at http://www.loanbright.com/alphatoledo/options.htm