| |
Close Your Commercial Loan With Fewer Headaches
A
CommercialBanc Article Published on September 2,
2006
|
|
Would you like to close your
commercial real estate loan
with fewer headaches? Well who wouldn't. But as the old
saying goes, "easier said than done." |
|
That is, until you've read this article, written by
CommercialBanc's own commercial mortgage loan underwriting team. |
|
We give you some valuable tips that will help ensure
your commercial loan or apartment loan closes quicker,
easier, and yes, with fewer headaches.
|
|
What makes the biggest difference between a
commercial
mortgage loan that closes in a smooth and timely manner, and
one that seems to drag on and on, with request after
request from the underwriter for "more documents"? |
|
Simply put, preparation. It's amazing how simple some of
these tips may seem, but what's even more amazing is how
many people fail to follow these basic guidelines when
applying for a commercial mortgage loan. |
|
So let's cut to the chase. Here are some basics you must
follow if you would like your commercial real
estate loan to close in a smooth and timely manner: |
Make sure your two most previous years - both
personal and business -tax returns are complete and
filed
If you've filed an extension, have the
extension readily available and make sure the
extension is valid - not expired. Prepare year end
financial statements, they will be needed since you
are on extension and your most recently filed
returns could be easily 18 months old
Sign all copies of your tax returns. Most banks
will not accept copies, if you only have copies,
sign the copies and notify your accountant that you
need the originals as you are applying for a
commercial real estate loan and the bank most likely
require the originals
Prepare year-to-date personal financial
statements and business operating statements - no
more than 60 days old
Locate your 3 most recent months bank statements
- all pages
If you are applying to refinance your commercial
mortgage loan: make sure you have your
payoff statements, survey, title policy, and
appraisal in hand
If you are applying for a
commercial mortgage loan
to purchase commercial real estate, the sales contract must
be valid. If the contract will expire prior to the
closing of your commercial real estate loan, get an
extension upfront
For investment properties, make sure all tenant
leases are valid.
- ensure lease terms match rent roll -
Pull your personal credit report. Clear up any
mistakes - if you have any derogatory items, write a
letter of explanation and include with your
commercial loan
package - do not try and hide any derogatory items,
underwriters are human, they realize people make
mistakes and look favorably towards a borrower
that owns up to their mistakes
If the borrowing entity is a corporation, make
sure the corporation is in "active" status, i.e.
active business license, occupational license, etc.
Put you accountant and lawyer on notice upfront
that you are applying for a commercial loan. Inform
them you will need up-to-date business and financial
documentation. You will be surprised how many times
a borrower will hear, "thanks for telling me, I was
going on vacation for a couple weeks, I will prepare
what you need before I leave"
Be realistic about the property's value. There
is nothing worse than putting together a great
commercial loan
package, having perfect credit, getting approved for
a low interest rate, spending the money on an
appraisal, only to have the value come in far less
than represented - ending up in a declination of
your commercial real
estate loan request and a
bunch of wasted time and money
Do not misrepresent anything on your commercial
mortgage loan
application, whether minor or major in nature. If
discovered, it puts a poor taste in the mouth of the
underwriter - often just bad enough that if your loan
is "on the fence" of either being approved or declined, it
will most likely be declined
Do not, under any circumstances, order your own
appraisal - it is a conflict of interest for a
borrower to order an appraisal on there own behalf,
as it could be seen as an attempt to influence the
property's value
|
|
Commercial
Mortgage Article
published on September 2, 2006 by CommercialBanc.com |
|
This article
is protected under the copyright laws of the United
States (title
17 U.S. Code).
Any unauthorized use is strictly prohibited. If you
would like to reprint this article for use on a
commercial website, please
contact CommercialBanc for more information. |
|
|
