The residential real estate market continues to struggle with sales of existing homes falling slightly in March. Residential mortgage brokers might find that with rising home prices and rates, as well as tighter credit standards, they’re still struggling to find borrowers with whom to do business. If this is the case, now is a great time to get started as a commercial mortgage broker. There are plenty of business owners looking for small commercial mortgages, and it’s an underserved market. Here are the questions you need to ask your borrower to submit a loan scenario:
- What is the property like? As the mortgage broker, you need to know the facts about the building being pledged as collateral. What kind of building is it? How large is the property? Where is it located? Is the property owner-occupied or is it an investment property? These are all important pieces of information your lender will want to consider.
- How is your borrower’s credit? Your borrower’s credit is an important tool for a small commercial mortgage lender when deciding whether or not to finance a loan request. Make sure the lender has an up-to-date report when evaluating the loan scenario. Prepare your borrower to discuss any financial issues that appear on the report, like account delinquencies or bankruptcies.
- How is your borrower going to use the mortgage? A small commercial mortgage lender will want to know how your borrower plans to use the funds. Whether it’s purchasing a new property, or refinancing a mortgage to improve an already existing business, the more information you and your borrower provide the small commercial mortgage lender, the easier it will be to obtain a small commercial mortgage.
- Can your borrower repay this mortgage? Your small commercial mortgage lender is going to want to know that a borrower can make their monthly payments. Provide your lender with relevant financial information, such as an income and expense report. A completed 1003 or a detailed personal financial statement will also give your lender a good idea about the borrower’s ability to pay.
Working on the occasional small commercial mortgage will allow you to supplement your income as the residential market continues to get back on its feet. Make sure you discuss the above questions with your borrower before sending an application, a tri-merge credit report and a loan summary to a commercial lender.
Not sure where to find commercial mortgage leads? Read: 5 Ways To Find Free Commercial Mortgage Leads and watch: How Does A Residential Mortgage Broker Expand Into Commercial?