Commercial Mortgages Are Available By Banks, Commercial Mortgage Firms And Private Lenders
Commercial mortgages are available through banks, commercial mortgage companies and private lenders. Commercial mortgage rates vary as widely as residential mortgage rates. Standard banks provide some of the lowest rates available. However, they've restrictive lending criteria, which constrains them from making commercial mortgages for several types of commercial properties. Gas stations with or without convenience stores, as an example, could be difficult to obtain commercial mortgages for. Commercial mortgages may also be difficult to obtain from traditional banks in the event you do not have excellent personal and business credit ratings.
Hard money commercial mortgages are usually available through private lenders who have much more flexible lending criteria. Also known as hard money lenders, private commercial mortgage companies focus much more the current value (today's selling price) of commercial property than on your individual financial package.
When applying for a commercial mortgage, be prepared to provide your commercial mortgage company, be it a bank or maybe a hard money private commercial mortgage company, with the following:
- 2-3 years' taxes to you and/or your business
- 2-3 years' financial statements
- A completed conventional commercial mortgage application for the loan, which includes a personal and company balance sheet
- An outline of the use of proceeds of the commercial mortgage you are looking for
- A description of the property
- The existing selling value of the property
- The cost of developments you'll make to the property
- An estimate of the property's value when with changes
- A repayment plan for the commercial mortgage - how you'll pay this commercial back
- For a hard money bridge loan, supply an exit strategy for the commercial mortgage - will you refinance this commercial mortgage having a standard bank after creating improvements or alterations to the existing property or some other scenario?
In case you are working together with a private commercial mortgage company (hard money lender) be prepared to show a proof of funds with your initial application. Supplying reasonable proof that you are ready to cover the closing costs and fund the difference between commercial mortgage and the total cost of the property can make your commercial mortgage application move through the steps to funding significantly faster.
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