It’s best to be able to take your time while looking for the right commercial loan. The fact is, unless you have money to burn, you probably need a mortgage. But how can you be sure you’re getting the right one?
In today’s financial landscape, commercial borrowers have a dizzying array of options. Sometimes, too many choices can be just as difficult as too few.
You’ll want to do your homework and browse potential commercial lenders first, but keep these tips in mind to get the commercial loan that fits with your plans for the property, addresses the risks with which you are most concerned (like interest rate risk, balloon date maturity risk, monthly payment, lender speed and efficiency in underwriting and bringing the money to the table, and especially, your working relationship and trust of the lender).
- We know, you want the lowest possible interest rate. But don’t focus on the rate at the expense of everything else. You’ll need to find out all of the fees charged by the commercial lender, such as closing fees. If you come across a commercial lender advertising a “no-fee” loan, that simply means the fees will be included in the rates. Plus, keep in mind your ideal monthly payment .
- The sad truth is that even the best companies can hire terrible employees. If you’ve found a commercial lender you like, take the time to interview the specific person who will be working on your loan. How much experience do they have? Do they belong to the National Association of Mortgage Professionals or the equivalent group in your state? Determine whether these questions really matter. Check out reviews and references online, and do your homework. Also, make sure their personality and communication style syncs up with yours. Entering into a mortgage is a big deal, and it can change your life profoundly. Buying a commercial property can get expensive, and your costs won’t just come from the lender. If you’re unsure about any of this, your lender can either answer your questions or point you in the direction of someone who can.
- Not all lenders are created equal, and not all of them offer the same programs. The USDA offers rural development loans, which can be perfect for a business in the countryside. Remember that the down payment requirements, credit requirements, and loan-to-value ratios can also be very different between lenders, so be prepared to compare.
- The SBA offers loans on businesses, both with and without real estate under various programs. Qualification can be cumbersome and time consuming. If you have a deal that is time sensitive, you may want to look elsewhere to allow you to get your deal done and not risk losing the opportunity because of government red tape.