The global financial crisis has left lots of borrowers out of luck when it comes to buying the commercial property that they need or want. As many as eighty percent fewer commercial property loans are now being written than than before. If you have been rejected by a lender and are looking for an alternative funding source to buy your commercial property, you should consider a private commercial mortgage lender.

Communicating With Your Commercial Mortgage Lender

Private commercial mortgage lenders have money to lend, but getting them to lend that money to you takes a bit of finesse on your part. First and foremost, you should respect their time and give them the information they need to make a decision about your commercial property mortgage loan in an understandable format.

Why is respecting the time you take up when communicating with your lender important? Because there are so many borrowers right now who are looking for these types of loans, your lender is a busy man (or woman). Getting time to talk to the lender is not as important as the information you will compile regarding your intended purchase.

Summarize Your Funding Needs

Before meeting with your potential Private commercial mortgage lenders, you should summarize on one sheet of paper the full details of your business venture, including projections regarding future profits and a timeline of how long it will take to become successful in your new endeavor. You should also provide appraisals for the lender to look over that clearly show how much the property that you wish to purchase is valued at under current market conditions.

Lenders will appreciate commercial property investors who respect their time. If you approach them correctly, with the right information in the right format, they will give your deal an honest look and, if your deal meets their parameters, they will fund you quickly and efficiently. Include the location of the property, and a brief description of the age, condition, and size of the property.

Your private commercial mortgage lender will be very appreciative of an abridged version of any analysis and reports that you provide – cutting through the red tape of researching the property can go a long way towards getting you the loan you need. Let the lender know the exact figure you are looking for to get started with, and also any equity that you have to pledge as collateral to secure the loan. If you have collateral, include an appraisal of the worth of your collateral as well, in current market terms. In all communication, keep your tone professional, but be mindful to keep it short and to the point.

Shop Online For Commercial Mortgages

You can find great deals on commercial mortgages online. The Internet has become a very competitive online marketplace for lenders to offer their loan products at greatly reduced rates over those that you would find at a traditional bank. In addition, online lenders tend to have better approval rates for borrowers of all credit types.

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New bank signs indicate transition from Harleysville to Niagra
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Next month, all signs of Harleysville National Bank will be gone.

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FDIC Auctions Overdue Loans of Silverton, New Frontier, IndyMac
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Senate Banking Committee Chairman Christopher Dodd and Republican Senator Bob Corker are nearing a deal to create a consumer authority at the Federal Reserve, according to two Republican Senate aides.

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There are several potential issues that can delay or “kill” your commercial mortgage refinance. Some of which will just tack on a few days or weeks to the process while others will completely eliminate the lenders interest in funding your loan. A prime example of this is value and environmental issues.

1. Title Problems. A forgotten lien on title can have a major impact on closing. Perhaps the dollar amount of the lien is substantial and cannot be rolled into the loan amount. Or the borrower may challenge the lien and will have to get it removed/resolved before the lender will fund the transaction.

2. Value. When the borrower and lender negotiate a loan term sheet, one of the most important components is the loan to value ratio. For example, on a refinance virtually all banks will not go beyond 80% loan to value. In other words, if your property is worth $1,000,000, your potential loan cannot exceed $800,000. If after your appraisal has been complete and the value comes out at say $900,000, you have a problem and a dead loan.

Besides the obvious frustration due to the canceled loan, there can be much disagreement with exactly how the value was determined. Appraisal reports are not perfect and have a subjective component to them. Deciding which comparable recent sales to use and how exactly to add/remove value from these comps is up to the discretion of the appraisal company.

3. Sudden Change in Business. Lenders sometimes call this “Adverse Change”. Basically what it means is that there has been some type of borrower change from the time of initial loan approval to the closing. With some commercial mortgage refinances taking as long as 90 – 120 days to complete, much can go wrong in that time.

For example, we had a transaction where the borrower had to purchase a small fleet of trucks for his business. The truck loan was personally guaranteed and was reported on his personal credit report. The additional debt dragged his score to the minimum acceptable levels for the funding bank. In addition, the cash flow was tight to begin with and this additional debt also affected the numbers. It created some tense moments for all involved, but was resolved.

4. Environmental Issues. The liability for the lender having to take back a property with environmental issues is huge. No one wants to be stuck with the bill and cumbersome process to clean up a property. Not to mention the possibility of being sued by neighboring owners. It is not unheard of for these costs to exceed the value of the real estate itself.

In regards to a commercial refinances, most environmental issues are not on the scale of Chernobyl. What typically happens is that the results of the Phase One come in with concerns and a recommendation for a Phase 2 report, which typically requires borings and soil samples. The cost on the Phase One is around $1,800 while a Phase 2 is much more expensive. It is not unheard of for that report to be approximately $10,000.

The borrower will have to pay for this report upfront and in cash. He could be reimbursed this cost at closing, but will have to get there – if the results of the Phase 2 shows more issues the borrower could be in a very bad position and may have dead loan and be out the $10,000.

5. A Disaster. It goes without saying that if there is some type of damage to the subject property or perhaps a death to one of the partners, that this will have a substantial delay in the least, to the refinance.

6. Insurance. The subject property has to be insured. To some this may seem painfully obvious but we have seen many refinances get delayed because of this. This problem is especially relevant on refinancing out of private mortgages and or seller financing. Many private lenders don’t confirm that proper insurance is in place or simply do not care. Also, on cash out refinances the borrower may have to increase the insured amount as the loan increases which can create issues in and of itself.

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Niagara Falls or babbling brook. How is your flow?

How do you get clients in the door? Do you have the budget and time to undertake a massive marketing campaign? Could experience with multiple property types and applications increase your value to the commercial market? Where are your deals located? How is the market in your area? Is your referral network bringing you enough business? These are all questions you need to consider when you think about how to increase your deal flow.

Of course every loan you work will not close; that is not the reality of the commercial mortgage industry. You need to be in front of the right people at the right time with the right solution to even be considered. Here are the 5 main factors that affect your deal flow which ultimately affects your cash flow. The first step is awareness; knowing what the issues are will allow you to determine a solution. Rate yourself in each of these areas:

-Referrals: Referrals are king. This is by far the number one way for a commercial broker to get business. This certainly works well for those that have been in the industry for years and have a large network, but what about those new to the industry? Can you survive waiting on someone to refer you when no one knows you exist?

-Marketing: This is how we let our potential clients know who we are and that we can provide them with a solution for their financing needs. The problem is that there are hundreds of other solutions out there all competing for the same client. Without the budget and knowledge to do it right, it is very difficult to get a good return on your marketing investment.

-Expertise: What you know and how long you have been in the business has a dramatic affect on deal flow. Of course, those that have been in the commercial business for 10 years have a greater client base and referral network. You can’t buy experience, no matter how much you spend, but what you can get is training. Through continuing training, especially at the beginning of your commercial career, you can build the knowledge it takes to get the deals done. Share that knowledge with your potential clients and you have set yourself up as the expert in the field, despite your lack of experience.

-Geography: It is no surprise that by serving a larger geographic area, you will be exposed to more deals. However, without the support of a large national company this is very difficult and potentially cost prohibitive. The downside of most national companies it that by bringing the deals to you they will expect something in return. Often a big chunk of your commission. It’s a catch 22, you get more clients, but now you need even more than before just to break even.

-The Market: Some markets are hot and some are cold that is the reality of the industry. If you are only serving a small geographic area and that area goes cold, what do you do? The key is to ensure that your client base is as diverse as possible, not only by location, but by property type and industry.

What to do? Build your business. Start by looking at the percentages that each of the above are contributing to your total deal flow and set targets for the coming year as to what you want the percentages to look like. For example, if referrals now make up 10 percent of your total business, set your targets for 20% next year and establish the game plan to do it.

For marketing, are you tracking a cost per closed loan? Do you know what you’re spending for the revenue you’re generating? Begin to cull out the sources that are not generating the returns you require.

When looking at geography, start to examine how you can expand the markets you serve. This will both increase your deal flow and minimize a downward movement in any one particular market. In effect, it is diversifying your portfolio. Look for a partner that can introduce you to new markets and provide you with lead sources into those markets.

In summary, deal flow is driven by your presence. When the market knows you’re there and do quality work, your flow will build exponentially. The next step is to formulate your plan to increase that presence and identify the partners that can help you do it.

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New bank signs indicate transition from Harleysville to Niagra
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Mortgage Rates on 30-Year U.S. Loans Fall to 4.97% (Update2)
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China banks told to take hard look at mortgage risk
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Wen Warns of Bank Risks, Pledges Property Crackdown (Update3)
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Well begun is half done, is a very famous saying that is apt in every walk of life. In fact, if you follow it diligently, you can save yourself from many threats and you can even resolve several problems. This can happen only if you plan out everything that you do. Preparation helps you go a long way in achieving your goals. Be it your normal routine tasks or when planning a major event, the importance of to-do lists and planners is known to one and all. After all management is a subject that has widespread application and an art that grows with better planning. Thus, when applied to your finances, this science can produce such results that shall leave you astonished and may be at times speechless. Fixed mortgage interest rates leave you speechless as well! They provide you with stable figures that you can manage without any stress.

Managing your finances well is not everybody’s cup of tea, but, with help and constant effort, you too can become a good manager. Take for instance, the case of working out an advance. Based on your financial needs and circumstances, what may be good for you may leave another in a position beyond restoration. Therefore, do consider all the various offers in town before you close the deal. While working the same, check out all the various categories of interest rates and see what suits you best. In situations when the interest rates are at an all time low in the industry, you should try to get your loan worked out at fixed mortgage interest rates. The advantage of this is that you shall be able to enjoy the same rate of interest throughout the entire duration of the mortgage period. Thus, even when the interest rates rise during the amortization period, it does not increase your cost of finance as you have kept yourself secure from the market fluctuations by opting for fixed mortgage interest rates.

For those who are wondering as to what fixed mortgage interest rates are, they are the rates of interest charged on a mortgage loan, that remain unchanged over the entire length of the pay back term. In other words, the interest rate charged is fixed irrespective of the interest rates prevalent in the industry then. So, if you manage to clinch a deal at fixed mortgage interest rates and where the rates are really at rock bottom levels, then you are lucky enough to grab a fortune.

Like everything else, fixed mortgage interest rates also have their own share of drawbacks. God forbid, if you get hold of an agreement wherein, the fixed mortgage interest rates offered is higher than the ones throughout the loan period, then you shall curse yourself for not having availed of plans with variable rates. Remember, once you make the commitment with the fixed mortgage interest rates, you have to stick with them until you square off the debt or refinance.

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Consumer Agency Within Fed Seen as Victory for Banks (Update1)
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Usually a home is the primary asset in the financial portfolio of an individual. It provides immense financial security and strength in the long run. Being a loan seeker, your main concern is generally to find the best mortgage loan package with the best possible interest rate. However, credibility of the lender you are dealing with is also important as the market is flooded with lenders who practice unethical lending strategies.

Knowledge is power

When armed with sufficient knowledge, borrowers are at a superior position to be wary of such predatory lenders. They make informed decisions while applying for mortgage loans and strike the deal that meets their individual needs in the best possible way.

Points to strike the right mortgage loan deal

Any mistake at this point can land you in stressful debt conditions. So, it is essential for you to keep in mind the following points in order to take the right mortgage loan decision:

1. Broker or lender – Banks and credit unions are big lenders who have good reputations in the market for professionalism and ethics. They offer only their own specific loan packages. On the other hand, a mortgage broker or a mortgage wholesaler provides you access to several lenders so as to help you get the best loan package considering your specific credit rating and other associated intangible factors. Hence, you have a wider choice in case of a mortgage broker. 

2. Good Faith Estimate – Most people who look forward to mortgage loans are only concerned about the interest rates. But this is not the only factor that can make a difference to your mortgage loan. Apart from a low interest rate, the lender must also provide borrower with a Good Faith estimate for all the charges that are involved in the loan. Ask for explanations and question the quoted charges if you think they are not feasible. See if you can make them reduce fees, interest rates and charges.

3. Negotiation of interest rates – This point is usually for borrowers who are dealing through a broker. As the lending party is the third party in this case and the broker is involved in the dealing, he thereby charges a commission for his services. There are two ways in which the broker earns – yield spread and the original fees.  

In a yield spread, the broker generally tries to strike the deal at a higher interest rate than what is possible. Nonetheless, you are open to negotiate here as well and so you must take advantage of the opportunity. You can enquire the broker about his original fees and the yield spread, if he charges any. A fair amount of both should not be more than 1% of your loan. Ask for a concession if it exceeds 1%.

4. What’s your credit rating – This is a universal mantra for loans. The better your credit rating, the better will be your deals on mortgage loans with lesser monthly payments.

Last but not least, reading the documents of mortgage loans carefully is very important so as to avert any conflict later. It is foolish to assume that what you have agreed for verbally will be what is contained in the final documents.

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As soon as it comes to mortgage financing/refinancing, more and more Canadians prefer to employ a qualified mortgage broker. In keeping with recent studies, about a third of mortgage deals were completed through mortgage brokers. Canadians are now following the footsteps of their American counterparts, who are far less likely to just gatecrash into the nearest bank or lenders office for a mortgage. Nearly 75% of all U.S. mortgages were completed through mortgage brokers this year.

If we follow this pattern and it appears that we are, in that case we are in for a significant change in the way Canadians deal with their most important personal asset. In any case, returns on investments are not as rewarding as they were five years before, and investors are looking for ways to make monetary gains through ways they might have ignored.

There are a few noteworthy advantages in employing mortgage broker. To begin with, let us put side-by-side mortgage knowledge, nearly all banks have one or more loan officers who are exclusively allocated to help with mortgages. Their job is to expand and increase mortgage dealings for the banks. An Ontario mortgage broker, in contrast, is a qualified and skilled mortgage expert who has met highest standards set for mortgage brokers. The entire training of a specialist mortgage broker might surpass the training of their counterparts at the bank. More significantly, given that, the mortgage broker is autonomous and although he is not an employee of a particular lender, he has access to rate and information on plans and opportunities offered by several other banks and private mortgage lenders. Their job is to get the best possible mortgage rates as well as opportunities for you.

In addition, let us consider options available, a mortgage broker gives you access to several competitive lenders, each with a number of different mortgage choices. It can take weeks of investigation, calling and special visits to recreate the choice of features and opportunities that a mortgage broker has readily available. Rate information, mortgage choices and payment plans are up-to-date, so you and your broker can make valid comparisons of the options available. The result of all this option is a mortgage that is personalized and tailored to meet your requirements and to save you money. Besides, think about convenience, your mortgage broker will be accessible to you before and even after your mortgage is secured, which will be excellent for individuals who go through trauma of long hours on hold or interactive voice menu of a bank’s call center or customer care department.

Most of all, consumers are relying on mortgage brokers for lower rates and better deal. Access to a several different lenders is a clear advantage for mortgage seekers. Even a half-point variation on your mortgage rate can set you back by thousands of dollars over the term of your mortgage. Several mortgage brokers work under a brokerage association with enough mortgage numbers that they can bargain for the best possible rates for your state of affairs. Canadian homeowners who are now accustomed to the advantages of a mortgage broker and are not likely to go back to an era in which they just agree to the best rate posted by their local bank on their face value.

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