Much like baseball, closing small-balance commercial mortgages is dependent upon strategy. For mortgage brokers to succeed in the industry, it’s important for them to understand what’s required in every loan request and to make sure all of their bases are covered.
Make sure to provide the information below if you want to knock your commercial mortgage deals out of the park.
For small-balance commercial lenders, the building your borrower plans to use as their collateral is incredibly important, so getting some basic information about the property is crucial. Does your borrower own the property or are they looking to purchase it? What is the approximate value of the property? What type of business are they planning to run? Where is the building located and how large is it? Are there tenants, and if so, how many and what do they pay in rent? Does your borrower owe anything on the property? These are all questions you should ask your borrower before submitting the deal to a lender. Don’t forget to provide photos of the property.
Another important piece of the lending puzzle is your borrower’s credit history. While non-conforming lenders are willing to work with borrowers who have had past financial issues, they need to know that those problems have been resolved and that the borrower is reliable. Discuss your borrower’s credit history with them before contacting your lender, and be sure to include a recent tri-merge credit report with scores and tradelines in your submission.
3. Purpose of the loan:
When sending your lender a commercial mortgage request, you need to provide the use of funds. The lender will need to know how your borrower plans to use the money, whether it’s to purchase a new building, pay off their debts or secure working capital. Have this conversation with your borrower early on, and include why they need the money and how much they need in your loan submission summary.
4. Capacity to pay:
Your borrower’s ability to make their payments will be a major factor in whether or not they qualify for a small-balance commercial mortgage. Make sure to include relevant financial documents that show they can repay their debts when you submit the loan scenario.
Covering your bases and making sure that you have the necessary information is important to your success as a commercial mortgage broker. Knowing the basics about your borrower’s collateral, credit history, use of proceeds and their ability to repay a loan is crucial to closing these loans and earning more income. With this strategy in place, you’ll be an all-star in your lender’s eyes.