There’s plenty of room for error when a commercial mortgage broker is working to close his or her first commercial mortgage. Small issues can pop up throughout the lending process, especially if you’re working with non-bankable borrowers, and it is up to you to work with your borrowers and lenders to solve any problems. However, there are a few rookie mistakes that some first-time commercial mortgage brokers make which are actually easy to avoid. Here’s what not to do in order to make the lending process smoother:
- Don’t send an incomplete application. There are a few basic documents that most small commercial mortgage lenders will need in order to evaluate your borrower’s situation and to decide if they’re in a position to help your borrower. It’s important to speak with each of your lenders to determine which documents they require, but generally you’ll need to submit a 1003 or personal financial statement, a tri-merge credit report and a summary of the deal, including use of funds. Make sure you include all of these and any other documents your small commercial lender deems necessary. Submitting an incomplete application to a lender will make you look disorganized and unprofessional.
- Don’t set your borrower’s expectations too high. If you’re working with non-bankable borrowers, you need to make sure they understand what kind of small commercial mortgage loans they’re going to be able to obtain. Non-bankable borrowers simply can’t get bank rates, and the sooner you explain that, the better. If you don’t, the small commercial mortgages for which your borrowers qualify will just be harder to sell. When working with non-bankable borrowers, always under-promise and over-deliver.
- Don’t order an appraisal. If your borrower has had an appraisal done within the last few years and you’d like to send it to the lender for reference, do so, but you should not have your borrower order a new appraisal before submitting a deal. Most small commercial mortgage lenders are going to want to order an appraisal from an appraiser they’ve worked with and trust. It might seem like ordering a new appraisal will speed up the lending process, but it will most likely end up a waste of your client’s money.
While there will probably be a few bumps throughout the mortgage lending process when working with a non-bankable borrower, the above are basic mistakes that commercial mortgage brokers can easily avoid. Remember that it’s important to submit a complete application for each commercial mortgage scenario, to make sure your borrower’s expectations are realistic and to allow your small commercial mortgage lender to handle certain parts of the lending process.
If you have a commercial mortgage loan scenario you’d like to discuss, please call APEX Mortgage Corp. at 800-262-2739.