Closing small-balance commercial mortgages is a quick and easy way for brokers to earn additional income. However, if you’re not experienced in this area of the industry, it can seem a bit challenging. The key to successfully closing these loans is knowing what to do and what not to do. Here are some helpful hints to help you get started:
Do make sure you have the documents your lender needs.
When you submit a commercial mortgage scenario to a lender, it’s important that you send them exactly what they’ll need to evaluate your borrower’s situation. An executive summary, 1003 or commercial application and a tri-merge credit report are generally necessary, and it’s best to check in with your lender to see if they require any additional documents.
Don’t over-promise and under-deliver.
One of the challenges brokers new to the commercial mortgage industry face is inadvertently setting their borrower’s expectations too high, particularly when working with non-bankable borrowers. Promising bank rates and terms will only lead to frustration and make the deal harder to sell. Start off by telling them you’ll get them the best loan possible, and give them as many options as you can.
Do ask questions.
If you’re not sure about something, ask. Whether it’s a question for your borrower or your lender, it’s better to get the answer early in the commercial lending process. This will help you, your borrower and your lender to avoid unnecessary obstacles.
Don’t rush to order appraisals or title work.
Generally, commercial mortgage lenders prefer to use appraisal and title underwriters that are on their approved lists. It might seem like ordering the appraisal or title work will speed up the lending process, but it will most likely end up a waste of your client’s money and time, since commercial appraisals are expensive.
Small-balance commercial mortgages are a simple and great product to add to what you already offer! The commercial mortgage industry is full of opportunities, and it’s easy once you know how to get started. Make sure to speak with your lender regarding their lending requirements and what documents they prefer to handle themselves. Don’t be afraid to ask questions, especially about how to best sell their products.
For more on this topic try “The Basics of Submitting a Commercial Mortgage Scenario.”