Things you need to know before getting a Commercial Real Estate Loan
1. This property will use as owner occupied or Investment- it's very important question because it will effect the interest rate and the Loan program.
2.Do I have all the current operating statements and Rent Roll, if you don't have them work on it fast- you can't do the Loan without them, commercial banks usually asking for these statements to know the Rents, the Income, expenses of the subject property and how you manage the property as an Investor.
3.At least 2 years Tax Returns- some banks will not ask for it but they will get you a higher Interest Rate and put you in a different program, other banks will not even talk to you without Tax Returns.
So make sure you have Tax Returns.
4.How Long do you plan to hold the property? so you will know what program you will take- if you hold the subject property for 2 years only so you need to let your lender know that because he will qualify you for much a better rate and I think a better program, but if you plan to hold it for a long time that will be a different story- now you would want a longer amortization period, a lot will change with it.
5.What is the Occupancy level?- How many vacancies you have in the property?, it's important for the DTI.
6.What is the balance due to the current Mortgage you have?
7.What is the History of your Mortgage Payments?, do you have lates ? very important.
8.Check your credit few months before you're starting anything?, don't be afraid of having another inquiry on your credit because for the long run you will do your self a huge favor by running this credit. if you have anything wrong with the credit you can fix it, inquiries, derogatory, collections that you don't even know about, debt that you put aside forever, discharge accounts and disputes- everything is possible to do when you in control. SO CHECK YOUR CREDIT.
9.If you're Refinancing the property:
A. When did you purchase the property, and how much did you pay?
B. What do you think the value of your property is now?
C. How was the value of the property derived?
D. Is it supportable?
E. Is it a cashout Loan or Rate & Term(to get a better Rate)
All those things are very crucial to know before you're making your first call to your Loan Officer, you going to make his life easier and your Loan will finish probably within a month with no complications.
Some of us are not aware to the small details that are becoming a huge deal to the banks, specially these day's. Banks today are more careful, they ask lots of questions and they want lots of answers, most chances they will not make an exception for you or me, we're just a number in this Multi Billion Dollars Industry and we need to know what we doing, just to get things done in the right way.