If you’re looking to close small-balance commercial mortgages, you need to get to know your borrower, their business and their financial situation. Not only will this help you to build a good relationship with each of your clients, it will allow you to determine what kind of loan they’ll qualify for and the type of lender who can fund their request. Here’s how you can get to know your borrowers:
Let’s talk about your credit history.
To apply for a commercial mortgage, your borrower will need to provide a recent credit report with scores and tradelines. Before submitting the deal, you should have a discussion with your borrower about the report. If they’ve encountered financial obstacles in the past, how did they resolve them? Are they still in the process of repairing their credit? The answers to these questions will be very important in determining the loan for which your borrower can qualify. Learn more about working with borrowers with bad credit.
Tell me about your property.
Your borrower’s collateral is a crucial piece of the lending puzzle. The property type, value, location and use will all be major factors a lender needs to consider when evaluating the commercial mortgage request. You should also ask your borrower for recent exterior and interior photos, especially if they’ve made recent improvements. Read more about this part of the process and how to describe your borrowers commercial property to a lender.
How long have you been in business?
Unless you’re going the hard money route, your lender will likely want to know how long your borrower has been operating in their current field. A borrower’s experience is important, and lenders will be more at ease if they can see that your borrower is invested in both their business and the property.
How are you planning to use the money?
This one’s simple – lenders are going to want to know how your borrower is going to spend the money once the deal is done. Paying off a ballooning bank note, purchasing a commercial property, taking advantage of a great deal on equipment or inventory; whatever the reason, provide the lender with an explanation.
Understanding your borrower and their needs is an important factor in getting them the small-balance commercial mortgage that they need. From their credit history and property to their business and their plans, make sure you get as much detail as possible before submitting the deal to a lender. This will make underwriting, processing and closing the deal a much easier task for everyone involved.