Commercial mortgages Q & A
Q: My practice is looking at a new office in town and I want to make sure I get the lowest interest rate. How long should I wait before locking in?
A: With commercial mortgages, it is best to not focus on holding out for the lowest rate. Take in to account the monthly/annual payment being within your target range; you will have a better chance of keeping your dollars where you need them and still getting a decent interest rate.
Q: I have heard it’s beneficial to work with multiple brokers on a commercial close. Is this true?
A: This is a myth that can lead to a much more difficult process. Most people think more brokers means a better deal. In fact, when lenders see the same loan coming from multiple sources they assume no one is in charge of the deal.
Your best plan is to do research, check references and select a reputable broker. Engage this broker exclusively and allow them to obtain the best pricing and structure for you.
Q: My wife and I are opening up a small business. There are so many loan products out there, and this is a huge investment for us. How do we make sure we are getting the right mortgage for our store?
A: Simply put, leave it to the professionals. Find a knowledgeable, reputable mortgage broker you can trust and ask lots of questions! Brokers who aren’t willing to talk about different loan products and tell you only what they think you need to know probably won’t be a good fit. Find someone who is willing to explain about different products and how they will impact you and your business plan.
Q: I have located a new building where I’d like to open up an office. However, I need to upgrade some of my equipment and don’t want to incur the cost of installation at my current office if it’s not necessary. How long do commercial closings usually take?
A: The average closing takes 90-120 days. Loans can be closed more quickly (60 days), but this calls for a completely smooth process, and surprises can happen along the way! If you’re interested in this property, work with your broker on starting the title searches, inspections and surveys right away. All of these activities are out-of-pocket expenses to the borrower, so it’s in your best interest to allow your broker to guide you through this process.
Ben Dowell is the owner of Premier Mortgage Funding, Inc., a nationwide lender, located in Traverse City. For more information, call 941.5896.