When putting a loan package together for a bank or financial institution it is the mortgage
broker’s duty to bring the client’s story to life. The lenders often fixate on the specific guidelines regarding borrowers’ credit scores and histories, the types of commercial properties they finance, as well as the loan amounts they offer. The commercial brokers are responsible for providing creative funding options to borrowers seeking financing. One has to take time to understand a borrower’s unique financial situation especially for foreign clients with domestic and international assets and liabilities.
Commercial Real Estate
Commercial properties are assets that are secured by leases which provide recurring income. For the most part, they provide appreciation in value due to the proactive management, making cost effective improvements such as lighting & grooming in the property as well as supply & demand imbalances. Some of these assets are free & clear of debt, which allows one to buy more assets with less money. This equates to borrowing money at a lower cost than the investment return of the properties.
With commercial real estate, you have two types of value which consists of the land value & the structure itself. Real estate investments are an asset class often viewed as an alternative to stocks, bonds, mutual funds or commodities such as gold. These investments give you cash flow generated by dividends that are distributed to investors monthly, quarterly or annually.
Role of Mortgage Broker
The mortgage broker needs to delve into and piece together what is not on paper. They must have the ability to listen and understand the challenges the borrower faces in his business and investment objectives. This way the borrower’s history helps find ways to address his needs and goals. The loan submission summary entails basic information about the borrower or borrowing entity, the property itself, the borrower’s current financial situation and how the funds will be purposed upon closing.
The borrower’s collateral
The borrower’s collateral is a crucial element in the lender’s underwriting process, so it’s important to collect as much information about the property as possible. The mortgage broker tells the lender what type of property the borrower owns or is looking to purchase, the size of the building, where the property is located, if he occupies any portion of it and how much income the property generates. It is also important to discuss the borrower’s credit history to help the lender develop a full understanding of the client’s financial situation. Also, explain any past issues the borrower faced, as well as the steps the individual has taken to improve his credit score.
If the borrower’s credit score dipped due to late payment of medical bills, for example, the lender will probably be far more likely to provide the individual with financing than if the scores are low because the person was behind on mortgage payments. Providing your lender with a written letter of explanation will help move your deal forward and increase your chances of getting it approved. For foreign nationals that do not have a credit score yet, the mortgage broker is essential in crafting the loan package and might rely on non-conventional means to secure the financing.
Some sample loan programs available through Priorty Mortgage Consultants include:
SBA 504 PROGRAM (90% LTV)
- Domestic, Owner occupied (90% LTV)
- Foreign National, Owner Occupied, (75% LTV)
- Gas Stations
- Construction to Perm (Homes & Commercial)
- Foreign National, Income Producing (80% LTV)
- Lines of Credit