When your small-balance commercial mortgage borrower gets turned down by the bank, it might seem like financing options are slim to none or that the only solution is a hard money loan. This isn’t the case. There are nationwide, non-conforming commercial mortgage lenders that occupy the space between the bank and hard money. These lenders can help many of your non-bankable borrowers to secure a stable, affordable mortgage and can allow you as a mortgage broker to close more deals. However, there are some major differences between these non-conforming mortgage lenders and bank or hard money lenders. Here’s what to prepare your borrowers not to expect from one of these lenders:
If your borrower doesn’t qualify for a bank loan, they should not expect bank rates. This is something for which you need to prepare them. They’re going to get a much better rate with a small-balance commercial lender who specializes in non-conforming mortgages, but it probably won’t be the single-digit rate they were hoping for. If you don’t explain this to your borrower, the commercial mortgage for which they qualify will be a much harder sell.
While non-conforming commercial mortgage lenders are more willing to listen and understand your borrower’s unique situation, that doesn’t mean that they’ll lend to every borrower. Your commercial lender will still need a credit report and explanation if your borrower’s financial situation merits one. Your borrower will also still need to prove that they have the capacity to make their monthly payments.
Slow turn time:
Whether it comes to a commercial loan’s approval or how long it takes to close, you and your borrower should be prepared for the process to move fairly quickly with a non-conforming commercial mortgage lender. Because they don’t face the same kinds of regulations as traditional lenders, an experienced non-conforming lender can approve and close loans fast. Be sure you provide your lender with the documents they need throughout the process so your borrower’s loan can close as quickly as possible.
Non-conforming commercial mortgage lenders fill an underserved niche in the mortgage industry which is often overlooked by banks and hard money lenders. Because of the unique borrowers they finance, these lenders have a distinctive approach. As such, there are some things you and your borrowers shouldn’t expect when dealing with these lenders. As long as you’re prepared for the way they do business, a non-conforming commercial lender can help your borrower to achieve their business goals and help you to close more commercial mortgages. Find out more in our previous blog post on questions to ask a non-conforming lender.