Commercial Mortgage Tips

Many owners of commercial properties who are looking for a commercial loans are having problems securing one right now. The residential mortgage industry problems have trickled into the commercial mortgage industry and many lenders will only take the cream of the crop thus leaving leaving the rest dealing with hard money more expensive loans. If this is where your at there are some things to look out for.The delinquency that the residential mortgage markets experienced and scared mortgage lenders off is now projected to hit the commercial industry hard in 2010 thus making commercial mortgages even harder to come by.This being said it really puts the consumer in a vulnerable position as they generally will have a hard time going to their local banks for refinances. Once their local bank turns them down the question is where can they find a lender they can trust.There are a number of things that the consumer needs to be aware of when looking for a commercial loan. In many ways these loan can make or break a business if the loan turns out to be too expensive or there is no good exit strategies so being able to trust the lender you are dealing with is very important.In today’s markets your going to need a lot of equity in your property to qualify for a loan as lenders aren’t going to want to take the risk of a higher loan to value. If you have trouble verifying income, tax liens, marginal credit, etc. be prepared for a harder money loan that is more expensive.That being said one thing to be aware of is the commercial industry is largely unregulated unlike the residential industry. You can come across many unscrupulous mortgage brokers who aren’t looking out for your best interest. In many instances you will get an pre-approval letter and the broker will want you to give them a large sum of money up front which most times is nonrefundable. The pre-approval letter may lead you to believe you have a loan in place however it really is just a way to lock you into that particular broker. There are some brokers that make a living just taking fees to find a loan and then never actually funding a loan!Once you start your search for a commercial lender make sure if you get a letter of interest (LOI) that it is from an actual lender and not a mortgage broker. A mortgage broker does not have the ability to actually give you the money and really should not have the right to take your money stating you are pre-approved. You will ultimately have to put money up front but it should be directly for appraisals, environmental reports, title fees, etc and should be refundable.The commercial mortgage game can be frustrating however if you come across a broker you can trust then rest assured at least you can find out up front what your dealing with and how much it will cost you, which is half the battle!