Commercial Mortgage Loans – What Does it Take to Get a Bank Approval Today?
Because of the Great Recession, commercial lenders suffered huge losses, this is the same reason why banks got tough when it comes to commercial loan approvals . I bet you are thinking if you are qualified for a loan. The banks consider 3 important things for you to be approved for one and these are your collateral, credit, and your capacity to repay.
Capacity to Repay
When the bank checks a borrower’s capacity to repay, they thoroughly check the property’s cash flow. The property’s net operating income must be larger by at least 25 percent up to 45 percent of the commercial mortgage payment.
Credit and Collateral
Most commercial loans these days are being made by commercial banks, and you know what that means right? Before getting a mortgage from a bank you must have a good credit score. Usually, a bank requires a credit score of at least 660 but they prefer someone who has a credit score of more than 700. Most people still get loans even with lower credit scores but not with banks though. And as mentioned above, because of the Great Depression and the banks suffering huge losses, banks and commercial lenders are now demanding for more collateral.
But don’t panic, it isn’t that hard to get a loan with the bank even with the things mentioned above, compared to how banks operated back in 2006 and 2007, they have been starting to loosen up a bit. Getting a commercial loan from a bank which has 70 to 75 percent loan to value are now available. If you want to get higher loan to value deals with the bank, then you must have liquid assets like marketable securities or cash in the bank. And if you want to surely qualify for a loan, try applying for a commercial loan on lots of banks out there. There are times when you get turned down by a bank but then a few weeks or months later, that same bank will give you what you are asking for. Why does this happen you may ask? The bank just need to get their money out in the streets again since they have a lot of cash in their hands. If you want to know more about commercial mortgages and you are having a hard time getting one, check out newcityfinancial.com.