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Four Questions to Ask Non-Conforming Small-Balance Commercial Mortgage Lenders

If you’re interested in expanding your business to include brokering small-balance commercial mortgages, it’s important to know what you and your borrower can expect from lenders. Without this knowledge, you won’t be able to find non-conforming mortgages that fit the needs of your clients.

Here are some questions that you should ask a non-conforming commercial mortgage lender before you start doing business with them:

Tell me about your rates and terms.

If you’re working with non-bankable borrowers who need commercial mortgages, it’s important to expect a higher rate than a bank would offer and to prepare your borrower for it. Terms will vary. Some non-conforming lenders offer products that balloon after several years while others provide fixed and fully-amortizing mortgages. Lenders like APEX offer a variety of programs designed to meet borrowers’ needs. As a broker, you need to be familiar with these needs in order to get your borrower the right small-balance commercial mortgage. So, make sure you discuss a lender’s rates, terms and programs before submitting a deal.

Are there costs my borrower needs to pay upfront?

In the non-conforming commercial niche, there are a number of lenders that require your borrower to pay upfront fees before they even begin to underwrite the deal. There are lenders like APEX, though, that don’t require the borrower to pay any fees before closing aside from the cost of a commercial appraisal. It’s important to understand whether your borrower has a good chance of qualifying for a commercial mortgage before sending them to a lender that charges upfront fees so that you don’t waste their time and money.

What’s your average turnaround time?

If your borrower needs a small-balance commercial mortgage fast, you need a lender that can underwrite, process and close a deal quickly. Before you submit a commercial mortgage request, ask any lender with whom you’re considering working what their average turnaround time is. For example, APEX’s average is two to three weeks from the time your borrower receives their commitment letter.

How much can I make?

As a service provider, it’s important that you are compensated fairly for your work. Before you submit deals to a lender, ask them how much you can make on each deal and if they offer yield spread premium.

In order to successfully close small-balance commercial mortgages, brokers need to understand the basics. Make sure to discuss a lender’s programs with them, including their rates and terms. Find out if your borrower is expected to pay any upfront costs, as well as the turnaround time they can expect. And, of course, ask about you as the broker can earn on each deal you submit. These questions will allow you to find lenders who will be a great fit for you and your borrowers.

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