When working with borrowers seeking small-balance commercial mortgages, brokers tend to focus solely on the rates they can get their customers. While the mortgage rate is an important factor in any borrower’s decision, brokers should be sure to take other factors into consideration when presenting their clients with financing options.
Factors to consider when discussing finance options with borrowers:
When seeking commercial financing for your borrowers, you should always consider the terms a lender offers.
The rate is an important factor, but other aspects of the deal that can also affect your borrower include things like whether or not the loan is fully-amortizing, the prepayment penalty structure and the lender fee. The terms of the mortgage are also where your broker fee is included, so consider lenders that will allow you to charge a higher commission rate.
The way a lender services your borrower’s loan can also affect them in the long run.
Many small-balance commercial lenders package and sell their loans as commercial mortgage-backed securities. In this scenario, your borrower ends up making payments to a company they don’t know and may not trust. If you work with full-service lenders, they will work with your borrowers for the life of the loan, which makes things simpler.
A flexible lender is a benefit, particularly for non-bankable borrowers.
A small-balance lender like APEX is more willing to work with borrowers that have had past financial troubles and are committed to finding the best possible lending solution for your borrower. Working with a flexible lender also means you’re more likely to close more commercial mortgage loans.
While a small-balance commercial lender’s rate is going to be higher, they can close a loan quickly.
If your borrower is in a situation where time is of the essence and they need money fast, these lenders can get them the funds they need within weeks instead of within months.
Brokers should always try to get their borrowers the best possible terms, even if it means a slightly higher rate. Make sure to consider the overall terms a lender is offering and not just your borrower’s monthly payments. Take into account how flexible a lender is, how quickly they can close your borrower’s loan and the way they service their loans. These are all factors that can have an impact on your borrowers, and, as such, on your reputation as a commercial mortgage broker.