Why to ALWAYS Use a Commercial Mortgage Broker

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A Mortgage Broker is different than a Mortgage Banker. A mortgage BANKER is a loan officer who works for a bank, and their job is to originate loans that fit into their bank’s portfolio. A mortgage BROKER is an independent professional who works for the borrower, not for the bank, and they specialize in helping the borrower work with mortgage bankers by doing four things:

First, they help the borrower SHOP AROUND all of the mortgage banks in the market for the most competitive loan programs.

Second, they help the borrower ANALYZE & COMPARE the advantages and disadvantages of different loan quotes from various competing lenders.

Third, they help the borrower compile and PREPARE A COMPLETE LOAN PROPOSAL package for the underwriters,

And finally, they help facilitate and MANAGE THE LOAN PROCESS on behalf of the borrower all the way up until closing and funding.

So here are some things to consider when deciding whether or not to use a commercial mortgage broker.

Another thing that is important to know is that there is USUALLY NO ADDITIONAL COST to use a commercial mortgage broker. That’s right, the borrower typically does NOT pay extra to use a broker. The reason for this is because banks typically waive or reduce their origination fees so that the broker can collect that fee instead. So the borrower gets the advantage of having someone representing their interests, instead of the bank's, and it’s typically at no additional cost to the borrower.

The next thing to consider is EXPERIENCE. A good commercial mortgage broker will handle dozens of transactions each year. The broker understands the current lending environment, market conditions, and underwriting guidelines, all of which are constantly changing as the market goes through its typical cycles.

The next thing to consider is MARKET KNOWLEDGE of the current lending environment. Most real estate investors have just a handful of relationships with local lenders in their market. A good commercial mortgage broker typically deals with a wide array of local and national lenders every day, including mortgage banks, commercial banks, HUD lenders, investment banks, insurance companies, pension funds, credit unions, hedge funds, agency lenders, government agencies, and private lenders. A good commercial mortgage broker will have a far broader understanding of which lender and loan would be the best fit for any given transaction.

The next thing to consider is CERTAINTY OF EXECUTION, because a commercial mortgage broker has familiarity with the PROCESS each lender prefers, and best way to prepare a loan submission package for each particular lender. A good commercial mortgage broker knows how to prepare a loan request package that will be given the best consideration and quick response by lenders.

Another thing to consider ANALYSIS AND CONSULTING that you get when utilizing someone with EXPERTISE on all of the various ways that commercial loans can be structured, how certain terms affect the other terms of the loan, and which of those terms are negotiable. Too many borrowers focus only on the interest rate. A commercial mortgage broker will help negotiate many other deal points, including the maximum loan amount, the loan term, amortization period, whether the loan is recourse or non-recourse, prepayment penalties, closing conditions, post-closing and/or ongoing annual requirements such as inspections or financial reporting, etc. There are many, many moving parts in a commercial mortgage, and a good broker will be able to negotiate the best deals for their clients.

A commercial mortgage broker will be able to offer different choices and MORE LOAN OPTIONS, which can make a huge difference in the borrower’s cash flow.


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[RealEstateFinanceAcademy]

QOTD: What lessons or concepts would you like me to teach you? Tell me below! - Trevor

[t.browne]

4 years old but still key today. Thank you

[ShanePodClips]

And how much commission do you receive for each product you offer and how often does that influence your ability to make a good decision for the client instead of your commission check 🤷‍♀️