Commercial mortgage brokers are likely to see a wide variety of borrowers looking for a wide variety of loan products. This will almost certainly include borrowers stuck between the bank and a hard place – that is, borrowers who don’t qualify for bank financing, but don’t want or need a short-term hard money loan. Maybe they’re even looking to refinance to pay off a hard money loan. For these borrowers, a non-conforming, small-balance commercial mortgage could be a great solution. So, how do you know if this type of mortgage is right for your borrower?
Here are a few tips to find the right commercial mortgage for your borrower:
They’ve resolved, or are currently resolving, past credit issues.
For borrowers with serious or ongoing credit problems, a hard money loan will likely be the best option to secure financing. However, if your borrower has worked to rebuild their credit and is looking to further improve their financial situation, a small-balance commercial mortgage from a non-conforming lender is a potential solution. These mortgages are easier to obtain than bank loans, and allow your borrower to achieve their financial goals with a more reasonable rate and terms than a hard money loan.
They want stability.
While short-term hard money loans are great solutions for some borrowers, others are looking for more control over their financial situation and a consistent monthly payment. If you’re working with a non-bankable borrower who wants more stability in terms of their loan, a fixed-rate, small-balance commercial mortgage is a good bet. Be sure to seek out lenders who offer longer amortization periods for their mortgages in these cases.
They’re looking for reasonable rates.
Just because a borrower can’t qualify for bank financing doesn’t mean hard money rates are their only option. If your borrower is looking for the middle ground between the bank and hard money, non-conforming commercial mortgage lenders are likely going to be the best option for them. While the rate a non-conforming lender will be able to offer your commercial borrower will depend on a number of factors, it will likely be substantially lower than the rate they’d pay a hard money lender.
There are a wide variety of borrowers out there seeking commercial financing, and they won’t always fit with the bank or with hard money lenders. In these situations, it’s your job as the broker to find a non-conforming commercial mortgage lender that can meet your borrower’s needs.