A borrower’s collateral is one of the most important factors that a small-balance commercial mortgage lender considers when evaluating a request for financing. Because of this, it’s crucial for commercial mortgage brokers to gather as much information about the property and its uses before submitting the deal. Not only will this solidify your reputation as a competent professional in the eyes of your lender, it will make it easier for your lender to approve, underwrite and close the mortgage.
Here’s what you need to properly describe a property to your lender:
What type of building is it?
The first thing your lender will need to know is what kind of commercial property your borrower is looking to purchase or currently owns. Whether it’s an office building, a retail property or a mixed-used building, this information is crucial for a lender when determining your borrower’s terms, such as LTV and rate. Be as detailed as possible when describing the property, as a mischaracterization can slow down the process of funding a borrower’s mortgage.
What type of business does your borrower operate?
Again, details are very important here. The type of business your borrower runs can affect the terms of the loan. For example, does your borrower operate machinery on the property that produces waste? The possible environmental impact will have an effect on the way your lender underwrites the loan.
Where is the property located?
The location of your borrower’s building is going to be a significant factor for your lender as well. Provide as much information as possible about the area in which the property is located, including the address of the collateral itself.
The old saying a picture is worth a thousand words can ring especially true in the mortgage industry, since photos of the property might do more justice to a commercial mortgage borrower’s collateral than even the most detailed description. Provide both exterior and interior photos to the lender when you submit the deal.
Answering the above questions and providing pictures will help your lender to make the best possible decisions in regards to your borrower’s commercial mortgage request. Remember, it’s important to be as honest and detailed as possible in your description. All of the information the lender is seeking about the property will be included in the appraisal they order, and if there’s an issue, it will be too late and too expensive for your borrower.