If you’re a broker working with non-bankable commercial borrowers, you’re going to want to focus on more than just the interest rate when selling the deal. While the rate will certainly be an important factor in your borrower’s decision, you should also discuss other aspects of the deal that will impact your borrower when presenting them with their options.
Here are some things aside from the rate that your borrower should consider when seeking a small-balance commercial mortgage:
The terms the lender is offering:
As stated above, your borrower’s interest rate is important, but it’s not the only thing that should be considered. Whether or not the mortgage is fully-amortizing, the prepayment penalty structure and lender fees are all factors that will impact your borrower, and you should review all of these components with your borrower. Additionally, your broker fee is included in the terms of the deal, so consider lenders that will allow you to charge an appropriate commission for the amount of work you’re doing.
The way a lender services a mortgage:
There are many small-balance commercial mortgage lenders that package and sell their loans as commercial mortgage-backed securities. If your borrower chooses one of these lenders, they end up making payments to a company they don’t know and may not trust. Working with full-service portfolio lenders eliminates this issue altogether. They’ll work with your borrower through the life of the loan, which makes things simpler.
The flexibility of the lender:
Non-conforming commercial mortgage lenders are going to be more willing to work with borrowers who have faced financial challenges in the past. This flexibility will allow you to find your borrowers the best mortgage solution and means that you’ll be able to close more loans more easily.
The turnaround time that they can expect:
If you’re working with a borrower who needs a mortgage fast, non-conforming lenders are your best bet. These lenders aren’t constrained by the same regulations that banks deal with, so they can close a mortgage much more quickly.
Your borrower’s interest rate is an important factor in their decision, but it shouldn’t be the only thing they consider. Make sure that you discuss the terms that potential lenders offer them, the way their mortgage will be serviced, and the lender’s flexibility and average turnaround time. All of these factors have an impact on your borrower and will help to determine the type of commercial mortgage that will best meet their needs.