When working with commercial mortgage borrowers who need alternative financing, any manner of obstacles can arise. As the broker, it’s your job to work with your borrower and your lender to solve any challenges throughout the process in order to close the mortgage. With that in mind, there are a few mistakes that brokers who are new to closing small-balance commercial mortgages should do their best to avoid.
Here’s what to avoid to make the lending process easier for yourself and your borrower:
Don’t give your borrower unrealistic expectations.
If you’re working with non-bankable commercial mortgage borrowers, this is an especially important point to keep in mind. As the broker, it’s your job to make sure they understand what type of mortgage for which they’re likely to qualify, as well as the ballpark rate and terms they can expect. These borrowers simply won’t be able to get bank rates, and the sooner you explain that, the better. Assure them that you will get them the best possible deal for which they qualify.
Don’t send your lender an incomplete application.
When it comes to small-balance commercial mortgages, there are several basic documents that a lender will need to evaluate your borrower’s scenario, including a completed 1003 or mortgage application, a credit report with scores and tradelines and a summary of the deal. Talk to your lender about the specific documentation they’ll need to make a decision, and make sure it’s all included in your submission. This shows the lender that you take the deal seriously, and that you’re organized and professional.
Don’t order the appraisal without asking the lender.
If your borrower has had an appraisal done within the last couple of years that you’d like to submit to the lender for reference, do so. However, you should not order a new appraisal for your borrower’s deal without first speaking to your lender. Most small-balance commercial mortgage lenders have appraisers with whom they regularly work, and they’re likely to want to order from these trusted business partners. While it might seem like ordering the appraisal yourself will speed up the process, it’s just as likely that you’ll slow it down and waste a solid chunk of your borrower’s time and money.
While it’s likely there will be some challenges when working with non-bankable commercial borrowers, the above are easy mistakes for brokers to avoid. Remember that it’s important to keep your borrower’s expectations in check, submit all the necessary documents to your lender, and to discuss who handles what throughout the lending process. If you do this, the path to a closed commercial mortgage will be much smoother.