One of the hardest jobs that a loan broker has is "matchmaking" their client's loan request with the right funding source. Additionally, one of the biggest setbacks to closing loans quickly is having a lender decline a loan, requiring that the process begin again with somoene new. With these two challenges in mind, you can see how vitally important it is for the broker to understand the client's loan scenario, as well as potential lender's guidelines for approval as early as possible in the process.
Closing loans quickly can often seem like an unreachable goal. However, there are some tips and tricks to keep the wheels of the loan machine turning and churning in the right direction, with an end goal of faster closing for your client's loans. They all center around the basic idea of:
If you are a commercial loan broker or a mortgage broker considering small balance commercial loans, a critical success factor when serving your clients, is certainty in your loan closing. The ability to provide a reliable quote and a timely closing, should be the primary focus of every loan process. However, several things get in the way of "certainty."
These 10 easy tips will move your loan quickly through underwriting and make you a superhero in the eyes of your borrower and lender.
ARE BANKS BECOMING THE LENDER OF LAST RESORT?
Even with a great story and tons of equity, banks are declining loan applications because of strict guidelines.
A few reasons a bank will reject a loan:
- Borrower doesn't meet credit guidelines
- Property does not cash flow or meet debt to income requirements
- Property has high vacancy or is being stabilized
- Borrower cannot document income
- Borrower has Insufficient cash reserves
- Borrower has a recent BK or foreclosure
- Borrower has insufficient seasoning for cash out
- Borrower doesn't want a prepayment penalty
Banks are quickly becoming the last choice for borrowers with commercial property. The difficulty of getting a bank loan is driving many borrowers to alternative loan sources i.e., private money lenders. And private money lenders are courting these property owners in an effort to gain attractive yields for their investors.