When you are seeking a commercial mortgage Texas, it is important to understand the criteria that the lender is looking for to determine your creditworthiness. Meeting or exceeding these requirements can afford you much better terms from a convention lender.
Applying for a commercial mortgage Texas is a process that requires time, planning and also the payment of some nonrefundable fees. You will want to be sure that you understand the requirements to qualify for a loan before you submit your documents to avoid wasting time and money. A lender is going to require documentation to verify your credit rating, liquidity, net worth and the value of the property that you are going to purchase. All of these factors will help the lender determine if you are a good risk and if they are willing to loan you the money.
In general terms, to qualify for a commercial mortgage Texas, you should have a credit score of over 680 and have no foreclosures, bankruptcies or tax liens on your recent credit reports. Your business should also be three or more years old. If the business does not meet these criteria, then you should expect to be asked for your personal financial information. As long as you have good credit and are financially stable, then the lender would ask you to provide a personal guarantee on the loan. This means that if the business fails or you close the business for any reason, you would still be personally responsible for repaying the loan.
Aside from the financial health of your business, the next most important piece of information is the actual property that you want to purchase. This is the property that will be the collateral for the commercial loan. With that in mind, the lender wants to be certain that the property will retain its value for the entire life of the loan. This is the lenders safety net in case you default on the loan. The lender would then foreclose on the property and sell it to recover their money. Because commercial property values can fluctuate rapidly, the lender for a commercial mortgage Texas will want you to make a substantial down payment to ensure that you have instant equity and also to be certain that the property value remains greater than the balance of the loan.
Negotiate for Good Terms
When you begin to speak to lenders you will want to ask for a list of all fees that they charge to process a commercial loan application as well as all of the fees associated with processing an approved loan. You will also want to negotiate the best interest rate that you can. Making a larger down payment can often reduce your interest rate by as much as a full point. Having all of these numbers will allow you to calculate the total amount that the loan will cost you.
Select the Best Loan
Once you have determined the actual cost of each loan option, you will want to determine which lender best meets your needs. In most cases you are looking for the lowest cost but there can be other factors. You might be looking for a longer term and be willing to pay a little more interest over the course of the loan to have more time to make payments. The lower monthly payment could be more critical to you than the total cost of the loan. With your research complete you need to select the lender and the loan that best meets your needs.
Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC Private Hard Money Lender
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701
About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.
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