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Important Questions to Ask Your Commercial Mortgage Borrowers

One of the best ways to impress small-balance commercial mortgage lenders is to provide them with plenty of information up front. This helps your lender to better understand and underwrite each deal, saves time and leads to faster closings.

Here is some crucial information that every small-balance commercial mortgage lender will need to know:

What kind of property is it?

First, discuss the building your borrower intends to pledge as collateral, since the property type often helps to determine the LTV and starting rate your borrower will be offered. What is the current use of the building? What is your borrower intending to use the property for? Where is the property located? Is your borrower going to be operating their own business from the property or is it an investment? These are all pieces of information your small-balance commercial mortgage lender will need to know.

How is your borrower’s credit?

In order to properly underwriter a commercial mortgage loan, your lender will need to understand your borrower’s credit history. Make sure to pull a tri-merge credit report with scores and tradelines and discuss any and all financial bumps that your borrower has experienced before submitting the deal.

What is the purpose of the loan?

It’s important to discuss why your borrower needs a small-balance commercial mortgage and their plans for the money. Whether your borrower is looking to make some small improvements to their property, refinance to pay off a ballooning commercial note or purchase a new commercial property, your lender will want to know the details before making an offer.

What is the approximate value of the property?

The worth of your borrower’s building is an important factor in the underwriting process, so it’s important to give your lender an idea of its value. Don’t order a commercial appraisal; your lender will most likely want to handle that. If it’s a refinance, ask your borrower when they bought the property, what they paid for it and an approximation of the property’s current worth. It’s best to be conservative in your estimate. If it’s a purchase, make sure you know the purchase price.

What do they owe on the property?

Be sure to ask your borrower about any mortgages they currently hold on the collateral, and if there are any tax liens or judgments against the property. This helps to eliminate surprises when title is pulled and allows your lender to offer your borrower the best possible financial solution.

Knowing the answers to the questions above will not only allow the lender to underwrite your deal more quickly, it will also show the lender that you are a competent and trustworthy commercial mortgage broker. Earning your lender’s respect will help you to close more loans and earn more income.

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