Working with a Commercial Mortgage Broker
A Commercial Mortgage Broker is a financial professional who represents buyers of commercial and investment real estate. This representation ensures the buyer of no conflicts of interest, strict confidentiality, and honest analysis. Retaining a Broker is like adding a partner committed to a successful and efficient mortgage transaction.
What does a Commercial Mortgage Broker do?
Completing a successful commercial mortgage transaction is a process that requires analysis, creativity, and organization. As a mortgage broker, Texas Lone Star Lending works with you to choose a mortgage solution that best meets your needs.
Commercial lenders like paper and typically require that you thoroughly document your borrowing needs. Every real estate transaction is unique, and each requires a different level of documentation. Based on our experience, we will identify the information you need to collect and help you generate the documents the lenders require.
Now also is the time to make some financing choices. Does an ARM or fixed-rate mortgage make more sense? Is an assumable loan important? Your needs depend on your plans for the property. It makes no sense to pay for more loan than you need. We will help you select financing choices that match your situation.
Lenders typically make their lending decisions based on three factors: the strength of the property, the strength of the borrowers, and the strength of the cash flow. They measure these factors using arcane terminology. In the end they formulate a risk for the transaction, and this risk determines whether they will commit to the loan and on what terms.
While your documentation allows the lenders to calculate risk, the truth is risk is not absolute. It is perceived and often open to influence and explanation. There's probably something about the property you think you can change to make it more valuable. But what you see in the property as an opportunity, the lender likely sees as a risk. You need someone on your team that speaks the lenders' language, your advocate who can explain the story behind the property, to lessen the risk in the lender's eyes. That's what we do. Using our proprietary tools, we will analyze all the factors and determine the best way to present your property to lenders.
Once we have completed our analysis, it's time to shop for a lender. We have relationships with over 50 commercial lenders. Different lenders specialize in different types of properties, have different appetites for risks, and offer different terms. As your representative, we will guide you to lenders that will offer the best options for your transaction.
Based on our analysis, lenders will issue conditional loan commitments. A conditional commitment lists the loan terms a lender is willing to offer but conditions the loan on the lender performing due diligence. The lender is a for-profit business and is out to make a profit on you. Thus, it is possible that these terms are not the best the lender is willing to offer. Based on our experience, we have a good sense what the loan terms should be, and we will negotiate with the lender to get the best terms possible.
At this point, the lender also may request outside analysis from appraisers, engineers, inspectors, and insurance brokers. When possible, we prefer to use local analysts who know the dynamics of your real estate market, and we will help you choose experienced professionals who will provide exceptional service and quality work.
Communication is important for a quick, efficient, and successful loan closing. We will communicate with your chosen lender to quickly satisfy any conditions. We will communicate with you about the timeline for closing. And, finally, we will communicate with the Title Company and attorneys to arrange for closing.
Can't I do this myself?
Sure you can, but why would you want to? Your time is valuable. We already have relationships with lenders; we know how to mitigate risks; we know how to negotiate terms. Using our services allows you to focus on what you do best, your business, while we focus on getting you the best possible loans terms.
What will it cost?
We only get paid if we find you a loan. Typically, we charge from 1% to 2% of the loan amount to complete the transaction depending on the loan size and the complexity of the transaction.
How long to close a loan?
It generally takes us 45 to 60 days to close a commercial loan. However, if you have immediate needs, we have relationships with lenders that can close in 2 weeks or less.