Whether it is your first time getting a commercial mortgage or you are a seasoned borrower and real estate professional, understanding the process of real estate loans can help anyone through the stressful and important transaction of buying a property.
That is what hiring a commercial mortgage broker like Penn Street Mortgage is here for. When you work with our team of experienced commercial mortgage brokers, you can rest easy knowing you have a partner every step of the way to guide you through the mortgage process. Our expert team has been a trusted ﬁnancial partner in residential and commercial mortgages for customers for nearly two decades.
Ready to get a commercial mortgage? Here are six things you should know before starting the process of getting a commercial mortgage with a commercial mortgage broker.
1. The Right Time to Apply for a Commercial Loan
Timing is everything when it comes to growing your business and getting a commercial mortgage. That is why having a clear idea of your business goals and a well-thought-out plan for how the property will help is a crucial part of timing your commercial loan. A commercial mortgage broker can help review your plan and how your business’s financials can help or hurt the commercial loan application process.
Since your business and your finances will be closely examined by multiple lenders when you go through the application process, ensuring everything is in tip-top shape can make for a more smooth commercial mortgage experience.
2. How Much You Can Afford?
Understanding how much you can afford and how much you will need is really the big question when it comes to getting qualified for a commercial mortgage.
You want to ensure your monthly payments are affordable but also ensure you are qualified for the amount you need to borrow.
We can help you get pre-qualified for a commercial mortgage loan so you have an idea of what you are qualified for and how your monthly payments would be structured. This can give the bank and you clarity as you start shopping for a commercial building.
3. What is Your Credit Score?
Your personal credit score and your business credit score will play a significant role in the amount you are able to qualify for and what interest rate you are able to secure.
Both commercial mortgage brokers and lenders will review your personal and business credit scores to determine your creditworthiness, with a higher credit score will increase your chances of approval and can mean lower interest rates.
If your credit score is less than ideal, we recommend taking steps to improve it before applying for a commercial mortgage. A better credit score can get you better financing options and help you get the most competitive interest rates.
4. What Kind of Property Do You Want to Buy?
When you are applying for commercial real estate loans, the type of property really can impact your ability to secure loan programs and get financing. For example, businesses with certain types of commercial property could be restricted from getting certain loan types depending on the business or property size.
At Penn Street Mortgage, we are experts in the local real estate market, too, and can help connect you with reliable real estate agents who know the market and can help connect you with the right property for your business. Whether it is a retail or office space deal, make sure you research the local real estate market so you can feel confident in your investment.
5. How Down Payment Affects Loan-to-Value Ratio
If you have purchased residential real estate, you know that most loans require a 20 percent down payment to avoid private mortgage insurance. Similarly, in commercial mortgages, the down payment and loan-to-value (LTV) ratio are big factors when figuring out what kind of loan programs you are eligible for and determining which financing option is right for you and your client or business.
The more capital you are able to offer as a down payment on a commercial loan, the less risk the lender takes in the transaction. Most commercial mortgage brokers would advise strengthening your application with a significant down payment if possible.
If you have the opportunity to save more for a downpayment or offer up more assets, this can be helpful in accessing better terms and interest rates. We will help you figure out the right option for you and your financing to ensure you can still get competitive offers.
6. What Are the Current Interest Rates?
Interest rates play a major role in the overall cost of your commercial mortgage and how much you pay every month. And since they fluctuate so much, it is essential to do your research and understand current interest rates. Your commercial mortgage broker will help you understand how they impact your overall cost-to-borrow.
Having a good credit score, a significant down payment and a strong business plan can help you get the most competitive interest rates when it comes to your commercial mortgage.
7. What kind of loan programs are available?
With so many different commercial mortgage programs available, having a clear picture of your options is our main focus as your commercial mortgage broker. Whether you are looking for an SBA loan or want to explore more traditional commercial real estate loans, we will help you understand the difference between commercial real estate programs and how you can benefit from them.
Penn Street Mortgage – Your trusted Commercial Mortgage Brokers
Going through the process of obtaining a commercial loan is daunting.
But when you work with Penn Street Mortgage as your commercial mortgage broker, you will have a true partner in the whole finance transaction to advocate on your behalf and walk you through every step of the way.
With over 15 years in the business, we provide our clients with a smooth and honest process, ensuring you get not only the information and services you need but also build relationships for the long run.