Tips for Borrowing to Get Commercial Real Estate Loans
Borrowing money for commercial real estate purchases can be an intimidating process because it involves a huge expense and usually a lengthy process. It can take months to get all the paperwork gathered and submitted to the lender as well as to get an answer from the underwriters. There are three main tips you can follow to get the best out of this experience, research the lenders, apply early and know that the lender needs.
Research Lenders
Not all commercial property lenders are the same. Some are unethical, some are outright scams and others will have different application processes, terms, and conditions that you will want to know about before starting the paperwork. It is a good idea to apply for more than one commercial property loan with more than one lender to see which ones can get you the funding you need in the best time frame. This can also help you choose the best terms for your needs as well as see what types of financing you can be approved for.
Apply Early
Commercial real estate loans can take months to be considered by the underwriters and get approval. This means that you will want to put in your applications, with supporting paperwork, as early as possible in the process. You may still have to wait up to three months for an answer, but there are other things that you can be doing to move the deal along at that time.
Know What the Lender Needs
There are things that a lender needs to approve a loan that you will not be able to provide in advance. For instance, any appraisals, inspections and toxicity report that lenders consider will need to be ordered by them and not by you or a mortgage broker. This is to help the underwriters know exactly what their liabilities will be if you were to default on the loan and they would need to take possession of the property. This is not to say that you are not allowed to order these things yourself, just that those documents will not be considered by the lenders and may be an unnecessary expense on your part.
Commercial real estate loans can take a long time to get approved after you apply for them because they represent a considerable risk for both yourself and the lender. By applying early, researching potential lenders and knowing what those lenders need for approval, you can help make the process easier on yourself and keep you busy while waiting on approval.
