If you’re a broker who has decided to add small-balance commercial mortgages to your offerings, congratulations. You’ll be closing more loans and earning additional income this year. Closing these mortgages is a simple way to increase your business, but it’s important to understand what information your lenders will need when you submit a loan scenario. Here are the conversations you should have with your borrower when they are seeking commercial financing:
Ask about their property.
When you’re submitting a commercial mortgage scenario, it’s important to learn everything you can about your borrower’s property. Ask your borrower what they think their property is worth and make sure they have evidence to support the stated claim of value. Find out what type of property it is and what kind of business they’re operating, as well as its size and location. If your borrower is renting space in the property, find out how much the rents are.
Understand their credit history.
Working with non-bankable borrowers generally means working with borrowers who have had credit issues in the past. Story lenders are happy to work with these borrowers, but it’s important to demonstrate that your borrower’s credit problems are in the past. Make sure to submit a recent credit report and a credit explanation detailing your borrower’s problems and how they fixed them. Read more on how to convince a lender to look past credit score.
Find out how they plan to use the money.
Lenders generally want to know how your borrower will be using the funds in order to improve their situation. Whether your borrower is planning to make improvements to their property, pay off a mortgage or purchase a building, include the use of proceeds in your loan submission summary.
Make sure the loan will benefit your borrower and can be repaid.
Once you understand your borrower’s credit and financial situation, you’ll be in a position to understand whether this loan will benefit their business and if they will be able to make monthly payments. This is important, as lenders need to know if a mortgage will help a borrower and whether they can repay the loan.
Closing small-balance commercial mortgages is a simple way to earn additional income if you know how to approach the process. To be successful, you need to know as much as possible about your borrower’s property, credit history, plans and financial situation when you submit a loan scenario. Doing some research early on will allow you to understand when a loan is a good fit for your business and for one of your lenders.