If you’re a commercial mortgage broker who is used to closing loans with banks or other traditional lending sources, helping a client who doesn’t fit the mold can be difficult. However, non-conforming commercial mortgages and private hard money loans have become a big part of the industry since the Great Recession. In order to work with non-conforming and hard money lenders, you need to be aware of potential mistakes that can deter or kill your deals. Here’s what you need to do to be successful:
Find the right lender
If you haven’t closed many non-traditional commercial mortgages, it’s important to do your homework and find a lender that fits your borrower’s needs. Just because a loan does not meet bank requirements for financing does not mean that it will immediately be a fit for a non-conforming or hard money lender. Find out what each lender’s requirements are before submitting a loan.
Tell your borrower’s story
Generally, an experienced lender will want to take the time to understand the borrower’s story before getting too far into the application process. Especially with hard money loans, a good lender will know not to waste anyone’s time or money if the loan is not a good fit for them. Beware of lenders with a “quote terms now, turn it down later” philosophy.
Submit relevant information
No non-conforming or hard money lender wants to search through a large loan submission packet to find the most basic information about the loan. Be sure to include a loan summary detailing the property address, a description of the building, the desired loan amount and loan to value ratio and the reason your borrower needs the loan. This will make the process much easier for your lender.
Work with trustworthy sources
If you are unfamiliar with the non-conforming or hard money mortgage markets, you need to do your due diligence when seeking out lenders with whom to do business. Be sure to work with lenders who are experienced and has a reputation for funding mortgages.
Borrowers looking for non-conforming or hard money commercial mortgages are a growing and under-served market in the industry, and present a great opportunity to mortgage brokers looking to expand their businesses. In order to successfully close these loans and help your borrowers to obtain the financing they need, it’s crucial for you to learn about the industry and to keep from making basic mistakes. As long as you take the time to learn about lenders in the business and submit your loans properly, you’ll be well on your way to closing more loans.