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Commercial Mortgages-Does these Follow the Same Process as the Residential Mortgages

Commercial Mortgage

Commercial mortgage pertains to mortgage loan secured by commercial properties like office, shopping centers, apartment complex, industrial warehouse and more. The commercial mortgage proceeds are commonly acquired, redevelop or refinanced commercial properties. This type of mortgage is structured to address the needs of lenders and borrowers. Key terms involve loan amount or proceeds, term or maturity, interest rate, prepayment flexibility and amortization schedule.

 

Commercial mortgages are subject to due diligence and extensive underwriting before closing. The underwriting process of lenders might include financial reviews of properties and owners as well as review and commissioning of several third party reports like appraisal. As the name implies, commercial mortgage is mortgage on commercial properties instead of residential properties. These are usually properties designed to make money in certain way. The fundamental process for commercial mortgages is similar with the residential mortgages. The following are additional information to help you gain clearer understanding about commercial mortgages:

 

Types of Properties

There are certain commercial properties that will require commercial mortgage and these include the following:

  • Office buildings
  • Shopping malls
  • Industrial buildings
  • Hotels
  • Resorts
  • Parking Garages
  • Golf Courses

There are only few properties that would require commercial mortgage. You might also need one in case you obtained construction loan specifically to establish or build commercial properties.

 

Same Process, More Essential Details

To be able to get commercial mortgage, the common process is similar to any other type of mortgage which includes residential mortgage. One big difference is that lenders are more likely to be pickier especially in terms of lending commercial money. As borrowers, individuals have to secure more necessary details than the normal.

 

Some of the important details you are required to give are whether buildings have other occupants, type of business you will be operating and many other types of documents showing the feasibility of your exclusive commercial venture. The following are examples of information you might be required to show:

  • Environmental report
  • Appraisal or professional property
  • Net worth statement
  • The credit history of borrowers
  • Copy of fully signed sales contract

 

Finding the most Ideal Lender

Through all extended process and extra information, finding and committing with the right lender helps in getting your commercial mortgage quickly finalized. As much as possible, look for a lender with solid experience in the specific type of property you are planning to purchase. A number of commercial lenders are really specific especially when it comes to the size and type of commercial properties they will be financing therefore, might as well look for a lender that specializes in the property that you want.

 

Different lenders adhere to different conditions and terms, so it would be best to be familiar with your potential lender before getting deep in the process. Do not hesitate to ask questions anytime you have them in mind. Remember that a trusted lender will be more willing and happier to answer your questions and give you all the information that you need.

 

If you end up in a situation where in a commercial mortgage hanging on the horizon, give yourself more time for more multifaceted process over the standard residential mortgage.

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