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Educational articles for Commercial Mortgage Brokers

How to Refinance Your Borrower’s Commercial Mortgage

For commercial property owners, refinancing can be an important step in the process of achieving their goals. It can pay off debts, free up cash for inventory or property improvements or consolidate debts into one monthly payment.

As a broker, it’s your job to help them navigate the commercial lending process and secure the financing they need. Here’s how:

Talk to your borrower.

The first thing you need to do is have a discussion with your borrower about their current financial situation and what they’d like to accomplish with this commercial mortgage. You need to develop an understanding of their credit history, their business, and the commercial property they’re planning to pledge as collateral. Additionally, you need to talk about how your borrower will be using the money. Will refinancing their commercial property pay off a hard money loan? Will it allow them to obtain cash out for property improvements? Are they looking to pay off tax debt? A lender will need this information to evaluate your borrower’s commercial mortgage request.

Choose the lender that’s the best fit.

Once you’ve got a solid understanding of your borrower, their financial situation and what they’re looking to accomplish, you need to choose the right lender for them. While some of your borrowers might qualify for bank financing, it’s likely that many small business owners will need an alternative. This is where a small-balance commercial mortgage lender could be the best fit for their needs. Make sure to choose an alternative lender with a variety of programs, a flexible approach to underwriting and great customer service.

Collect and submit the necessary documents.

Now that you’ve determined which lender will best fit your borrower, it’s time to gather up the necessary paperwork and send it over. Most lenders will need (at least) a completed 1003 or application, a recent credit report with scores and tradelines, and a summary of the deal to review the commercial mortgage request. Exterior and interior photos of the property are also very helpful. Every lender will have different requirements, so make sure you know what yours needs before you submit the deal.

Cooperate with the lender to resolve any issues.

It’s not unusual for a few obstacles to crop up throughout the commercial lending process. As a broker, you simply need to help the lender resolve these issues as quickly as possible. Answer their questions in a timely manner and facilitate communication between the borrower and the lender.

Refinancing a commercial property is a great way for small business owners to secure financing for various projects or goals, or to pay off or consolidate debt. When working with one of these borrowers, make sure you talk to them to get a sense of their financial situation and what they want to accomplish. Then, choose the right lender, gather up and submit the necessary information for review and work with the lender to make sure the lending process goes as smoothly as possible and to ensure a quick closing.

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