"Before I found your company, I was looking for a commercial mortgage broker on Google. While doing my research I found selectcommercial.com. While researching other commercial lenders, I found myself coming back to Select Commercial. Your site answered most of my questions and had live rates. Anyway, I'm glad I found your company Stephen and thanks for getting my loan funded with minimal hassle."
Eva S., NY, NY
Commercial mortgage brokers have many sources of capital to choose from when placing a commercial mortgage request with a lender. Having many lenders to choose from gives a commercial mortgage broker advantages over an independent source. Who are these lenders, and which is best for your particular needs? An experienced commercial mortgage broker will know the best lender to use for your particular situation. Here are some of the lending institutions making commercial mortgage loans.
Local and Community Banks – While doing business with your local bank might seem like the logical choice, in many cases it's not. Local banks tend to rely on their relationships with their customers and not as much on competitive rates and good service. If you have initiated a loan through your local bank, it's probably a good idea to see if the rate given is a competitive one.
Agency Lenders – Fannie Mae and Freddie Mac are actively engaged in apartment building and multi-family lending for qualifying properties and strong borrowers. Borrowers seeking agency loans should have excellent credit, personal net worth, liquidity, and experience. The property should be in good condition with a solid rental history. Properties with high turnover, vacancy or deferred maintenance will not qualify.
Conduit Lenders – Wall Street lenders have traditionally been active with Commercial Mortgage Backed Securities (CMBS) loans. These loans, usually $3,000,000 and more, are more difficult to obtain in today’s market due to the volatility in the credit markets. Rates and underwriting requirements have been swinging wildly in this sector of the market.
Insurance Companies – Insurance companies have always provided low rate and long term loans on commercial real estate. These loans are underwritten conservatively (low loan to value ratios) and are offered on strong properties and to strong borrowers. Insurance company rates do not fluctuate with each and every move in the market as these loans are tied to the company’s internal cost of funds.
Credit Unions – Many credit unions are beginning to aggressively lend on commercial real estate. These lenders typically like deals close to home and like to establish relationships (they like deposits). They most often compete with the local and community banks in the area. These lenders weren’t very active in the past and don’t usually have any bad loans on their books at this time.
Private Lenders – Private lenders give access to capital for those borrowers unable to obtain conventional financing. These loans are usually short term and at rates considerably higher than conventional rates. These loans require less underwriting time and usually close within 30 days. Private lenders are more concerned with property value and potential cash flow than with borrower credit issues.
The past mortgage crisis changed many things as far as getting a property financed. The days of walking into your local bank and obtaining the loan you need (and that is best for you) are long gone. A good commercial mortgage broker who understands your needs and has access to all of the lenders described above is a necessity to get the best commercial mortgage rates and terms. He will be able to guide you through this process and help you obtain a commercial mortgage that meets your needs.