Why Use a Commercial Mortgage Broker? – NMP
âºHow many transactions does the borrower process in a year? Most real estate owners buy, sell or refinance a very limited number of properties in a year. In contrast, an active and knowledgeable commercial mortgage broker will process dozens of transactions over the same time period. The commercial mortgage broker will understand the current lending environment, market conditions and underwriting guidelines, which are constantly changing as the market goes through its typical cycles.
âºHow many lenders does the borrower engage with in a typical year? Most homeowners have relationships with several local lenders in their market. A commercial mortgage broker typically deals with a wide variety of local and national lenders on a daily basis. These include banks, Wall Street investment banks, insurance companies, pension funds, credit unions, hedge funds, loan agencies, government agencies, and private lenders. A good commercial mortgage broker will know which lender is the best choice to handle the given transaction.
âºIs the borrower sufficiently informed to best prepare the loan application file for the lender? The typical lender receives many more applications than they can review and approve. A commercial mortgage broker knows how to prepare a professional loan application that will stand out and be accepted by lenders. A commercial mortgage broker knows what information is essential to obtaining loan approval from a lender.
âºIs the borrower up to date with current transaction structures? Many borrowers focus only on the interest rate. A commercial mortgage broker will help negotiate many other points of the transaction including: maximum leverage, loan term, amortization period, recourse obligations, prepayment penalties, terms closing, post-closing and / or annual requirements, etc. There are many moving parts in a commercial mortgage transaction and a commercial mortgage broker will be able to negotiate the best deals for their clients.
âºDoes the borrower’s local lender offer a variety of different rates and terms? A commercial mortgage broker should be able to offer different choices, such as: five year fixed rate, seven year fixed rate and 10 year fixed rate options. In addition, the commercial mortgage broker usually offers many different amortization schedules. Many local lenders only offer short term loan options (three to five years) and short term amortization (15-20 years).
Most large real estate investment firms employ in-house finance professionals to research, negotiate, and place their commercial mortgages. It is often prohibitive for small businesses or individual investors to employ full-time finance professionals. These investors are best served by hiring a knowledgeable commercial mortgage broker to represent their interests on a case-by-case basis.