In today’s economic environment its difficult for commercial mortgage lenders to find a good commercial mortgage broker. Given the economic recession and the reduced commercial mortgage activity in the real estate capital markets, commercial mortgage brokers are under pressure to generate commission income and may not be advising their client as objectively as in the go-go days. Furthermore, it is typically taking 3 to 4 times as long to close a transaction as compared to before the recession began. These characteristics of today’s commercial loan market make it important for a borrower to do their homework prior to engaging a broker.Commercial lenders rely on skilled brokers to carefully analyzes the transaction and surveys the capital markets for a mortgage or financing that best meets the client’s needs, and processes and closes the deal. Both commercial mortgage lenders as well as business owners can have a mortgage broker identify which lenders are active in the market, and desired loan product, and negotiate on the lenders and borrowers behalf.It’s important to the capital providers for all their finance brokers they work with to maintain the highest standards of integrity and ethics in their business practices and maintain a steady analytical approach and keen market observation. Experience and relationships in the lending market are important aspects of a solid partnership between commercial loan brokers and lenders. A competent loan broker is well skilled to handle the needs of the real estate borrowers and commercial lenders, and begins by carefully analyzing the client’s needs and the characteristics of each transaction. They underwrites and package a financing request for the lender and confer with the borrower regarding its content and financing request. Strong commercial brokers are often able to structure a creative solution derived from their extensive knowledge of the capital markets. Oftentimes a commercial loan lender is used to structuring a loan in a certain way. A proficient finance broker is able to help both parties arrive at a structure which works best for both the borrower and commercial mortgage lender.Capital providers offer cutting edge terms to skilled brokers with a prove track record of success and assign senior level professionals, oftentimes the decision-maker, to work with the broker because of their large business flow and technical expertise. Some brokers can work quickly and place a transaction within hours if necessary, and can close institutionally priced loans in little as eight business days and ‘hard money’ loans in two days.
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Small Commercial Mortgages – Current Options
Borrowers with small commercial mortgage requests have limited options as many banks, lenders and commercial mortgage brokers will not consider working on or reviewing these smaller deals. The primary issue is that there just isn’t enough money in them to make it worthwhile for these professionals. Also, many smaller commercial mortgages turn out to be more difficult to get done and can be more work than larger commercial loan request, with the bigger pay day.So if you’re a borrower with a loan amount less than $500,000 what are your options? Number one, is get ready to play “ball”. Most banks, if they’re going to compete over a $300,000 commercial mortgage, for example, will want spin off business. For example they will certainly want deposits both in the form of checking and saving accounts. It’s not uncommon for them to ask for personal checking and savings as well. And the bank will be very interested in providing benefits to your employees, like insurance and 401k plans among other spin offs type products.You may have other options however besides just the local bank. And, their commercial mortgage options maybe undesirable as they often only offer 5 year fixed with 20 year amortization type loan structures. For example, there are still banks and lenders out there with non depository set ups that are only interested in writing your commercial mortgage. Again most of these groups only look at deals greater than $500,000 but there are roughly 10, maybe 20 national banks that want your smaller commercial mortgage. Some will go down to $200,000 a few even lower.The key here is to know where to look and where to find these banks that are actively marketing towards these lower loan amounts. And you want to make sure the contact person you’re working with is interested in doing the deal as well. If not, the process will be dragged out as your request will be ignored and neglected at the bottom of the “pile.”It’s interesting to note though that there are still some creative options out there for these smaller loan requests. For example we work with a bank that has a program geared towards loans under $500,000 and that they pay for all of the third party reports to do the loan.