According to the National Association of Realtors, the commercial real estate market is doing well despite a sluggish economic recovery. Mortgage brokers competing for business in the struggling residential mortgage market may want to consider adding small-balance commercial mortgages to their product offerings. If you’ve never submitted a commercial mortgage scenario before, here are a few things you need to be able to discuss with the lender:
- The property: Before submitting a loan scenario, a commercial mortgage broker should get to know the borrower’s property. You need to know the size of the property, where it’s located, the property’s cash flow, when your borrower bought the property and what they paid for it. Pictures of the property are also helpful.
- The amount: Any small commercial mortgage lender will want to know how much money your borrower needs. Be sure to discuss the amount with your borrower before submitting the scenario.
- The purpose: Commercial mortgage brokers should also discuss the use of funds with the borrower before submitting the application. Small commercial mortgage lenders want to know how your borrower plans to use the money and that the loan makes sense.
- The borrower’s credit: Your borrower’s credit is a very important piece of information to small commercial mortgage lenders. Make sure you provide a recent report and are able to explain any financial issues that appear in the trade lines.
- The ability to pay: A commercial mortgage lender will want to know that your borrower can make monthly payments. Be sure to provide your lender with relevant financial information, such as an income and expense report or a profit and loss report.
When working to obtain a commercial mortgage for a borrower, it’s important to provide the lender with the necessary information. As a commercial mortgage broker, you should be prepared to discuss the property, the amount of money your borrower needs, the purpose of the loan, your borrower’s credit and their ability to pay with the lender. If you are able to explain the above factors to a lender, your borrower has a better chance of getting the small commercial mortgage they need.