Introduction for New Commercial Borrowers

This post is written for those borrowers who are accustomed to the consumer mortgage lending processes and are venturing into a commercial credit for the first time. There are a few expectations that will go a long ways in your preliminary due diligence.

  1. Commercial mortgages take anywhere from 45-60 days at best.
  2. Commercial appraisals range from $2,500-$5,000 and take 2-3 weeks.
  3. Environmental reports are often required and range from $750-$2,500 depending on the scope.
  4. Interest rates are higher.
  5. Terms are normally 3, 5 and 10 years. Longer terms exist but are not typical.
  6. Because of the shorter term, you will have a balloon payment.
  7. Credit is important but negative items can be explained and mitigated.

If you have questions or don’t understand something in the process, stop and ask for clarity. Bankers will assume you understand and move on if you don’t. Give yourself plenty of time during the process. This will save you and your lender a significant amount of stress in the transaction.

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