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10 Things You Need To Know Before You Call A Commercial Lender Part 1
How often does it happen to you? You call your favorite commercial lender (because we all know that everyone has a whole list at the ready) to present them with your latest, most exciting deal and they inevitably ask you a question to which you do not have the answer. You walk away from the conversation needing to get more information. Wouldn’t it be nice to know exactly what details you should have prepared before you call your lender? Lenders love it when you know the details of your commercial loans! Before you pick up the phone make sure you have these 10 things answered!
This email is part one of a two part series. Here are the first 5 things you need to know before giving me a call. You can look forward to getting part two in your inbox next Thursday!
1. Property type is the best place to start and be specific. Lenders need to know what their collateral is and that often drives what loan to value and starting rate your clients most likely will be looking at. Ask the question what is the current use of the property and if they are planning on changing the intended use of the property. It is also imperative to ask if it is owner occupied or non-owner occupied. This would also prompt another question – will I need the rents and expenses for the property if it is non-owner occupied?
2. The Location of the property such as the City, State, and County are a great place to head next. They will let you know immediately before any more details are shed if that is a territory where they are able to lend. Some lenders are nationwide and others stick to areas in their own backyard. Some programs require a population density requirement to be met.
3. The most obvious question to know is what is the purpose of the loan? Lenders like to know how they are going to help. First and foremost we want to know that the loan makes sense. It would be a hard sell to your clients and lenders if it didn’t. For the initial call in, it is okay to state that the borrower is looking for a cash-out refinance, but make sure when you send in the application the details of the cash out is on the cover page or loan summary form.
4. Commercial appraisals are very expensive and often time lenders will not use appraisals from companies that are not on their approved list. The more conservative you are with the value, usually the more accurate you are. Remember, it is nearly impossible to purchase a property for $200,000 and in less than a couple years later have it increase in value to $750,000!
5. Do they owe anything on the property? This would include first and second mortgages as well as tax liens and judgments. This eliminates surprises when title is pulled! The details of the current loan (i.e. Balance, current rate, Amortization, Balloon date) Pre-payment penalties and lock outs are also a crucial part to knowing what is owed on a property.
Do you have a deal that is too great to wait until you can see part two next week?
By Ed Beard