The more commercial mortgage deals you have in your pipeline, the more successful your brokering business will be. It’s a simple rule to live by, but it’s important to make sure that the deals in your pipeline are strong loan scenarios so that you don’t waste time on non-conforming mortgages that aren’t likely to close.
If any of the following apply to your borrower and their small-balance commercial mortgage request, it might be best to turn them down:
The borrower can’t explain why they need the money.
Like any lender, a small-balance commercial mortgage lender will need to understand the reasons that your borrower is looking to financing their property. If your borrower cannot or will not provide a satisfactory explanation for their use of funds, turn the deal down. If your borrower doesn’t have a comprehensive plan for the money, lenders will be more likely to turn down their request.
The borrower has recent late mortgage payments.
While many non-conforming lenders are willing to work with borrowers who have had past mortgage issues, if your borrower has been late on mortgage payments in the recent past, that will be a big red flag. Unless you have hard money sources, it’s best to turn down borrowers who have had late mortgage payments within the last year or two and cannot satisfactorily explain the reason.
The borrower is unable to repay the loan.
In order to approve a commercial mortgage request, your lender needs to be sure that your borrower can make their monthly payments. As you go over your borrower’s financials with them, make sure that they will be able to afford the loan. If they can’t, it’s time to turn down the deal.
Driving in as many commercial mortgage leads as possible is a good strategy for brokers, but it’s crucial that you learn to say no when it’s appropriate. There’s no sense in wasting their time or your own when you know you cannot get them the commercial financing that they need. Developing an understanding of which deals are worth your time and which aren’t will strengthen your pipeline and allow you to close more small-balance commercial mortgages.