Commercial Lending - Underwriting Fundamentals 101

Commercial Lending

Today I want to talk to you about commercial lending.

So a lot of mortgage brokers and agents don't actually do this and they refer out.

We have a dedicated commercial department, so you can actually keep your deals right here in-house.

And I know you already know this, but you can keep your deals here. We can help you through the whole process.

Now, there's misconceptions, though, about what it consists of a commercial property.

So a lot of times, right, when you think and hear the word commercial, you're thinking mall apartment building, like office building, right?

That's what you're thinking. Because logically, and that's what it used to be.

However, you can get a commercial mortgage on a single family home.

What changes is the lending policies?

So if you look at residential lending.

And I'm referring to banks here, and you're getting the mortgage there. 95% of the applications review process is based on the borrower and 5% about the collateral.

Now, obviously, that's different if we're dealing with a B lender or a private lender.

So I'm just referring to the primary lending, you know, strong borrowers. But on commercial, it's different commercial.

It's probably 85, maybe 80% about the property and 20% about the borrower.

So a lot of times, you know, we'll have an investor with a minimal income and we help them to buy a property using just the properties income through the commercial division.

Okay. So there's lots of things that you can do on the commercial lending beyond, you know, financing your business, buying a store, like all those things are commercial.

But what changes is the underwriting policies, And that's a super important for you to know and understand.

So a lot of brokers and lenders will send a buyer to a B lender or private lender to get their financing, and they don't need to.

They just don't realize or know that commercial is an avenue that they can look at because they don't have those commercial departments available to them where we do.

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