If you’re a broker working with a non-bankable borrower who is looking for multifamily financing, a small commercial mortgage lender might be able to help. In order to begin the lending process, there will be some basic information that you and your borrower will need to discuss with the lender to obtain the multifamily financing that he or she needs.
- Credit score and credit report: A borrower’s credit score and credit report are important factors when a small commercial mortgage lender is considering a loan scenario. Because it’s such a critical part of the lender’s decision, your borrower needs to understand his or her credit report. Be sure that the lender is provided with a recent report so that they have the most up-to-date information possible. Your borrower should be prepared to discuss any past credit issues.
- Capacity to pay: It’s very important to small commercial mortgage lenders that borrowers have the ability to repay a loan. Small commercial lenders will want to make sure that the multifamily property cash flows well enough to justify the loan amount requested, so make sure that you and your borrower have an idea of the debt that he or she can manage. A personal financial statement or 1003 will provide a lender with the information needed to assess your borrower’s situation.
- Property information: You and your borrower need to be able to discuss the multifamily property with a small commercial mortgage lender. How big is the property? How many tenants does it house? What is the vacancy percentage? These, among others, are all questions you and your borrower will need to answer.
- Use of funds: The small commercial mortgage lender will want to know how your borrower plans to use the money, whether it’s purchasing a multifamily property to start a rental business or refinancing your mortgage to pay for improvements or to pay off another mortgage. The more information your borrower provides the commercial mortgage lender, the easier it will be to finance his or her request for multifamily financing.
Providing a small commercial mortgage lender with the information above is crucial to securing your borrower a multifamily mortgage. If you and your borrower can discuss the credit score, capacity to pay, property information and use of funds with the lender, your borrower stands a better chance of obtaining the small commercial mortgage they need.