What Borrowers Should Consider Before Obtaining a Commercial Loan

How can borrowers choose the best lender when obtaining a commercial loan? In the crowded world of lending, lenders often appear to be similar to one another.  Lenders may say they are offering great loans and have similar rhetoric, often-promoting very low teaser rates, or promoting great terms and low fees.

As a borrower, how do you cut through all the noise and differentiate between loan options to determine what is actually important?  How do you know who to trust?  What should you look for in a lender and advisor?

Reputation and Relationships Matter – It is as simple as treating people the way you would want to be treated (“The Golden Rule.”)  This simple rule, combined with hard work makes a real estate professional stand out.

The real estate industry is full of people who over promise and under deliver.  If it sounds too good to be true, it probably is.  There are many lenders in the market who will entice a borrower with a low rate or excellent terms that they cannot deliver, only to take a borrower’s time and money.  These lenders often change the loan terms last minute and force the borrower to make a decision between closing under new inferior terms or trying a different lender, possibly forfeiting deposits, valuable time, and even putting a sale transaction in jeopardy.

Real estate is a relationship business.  Trust, a past track record, knowledge and expertise are traits that help get loans closed that otherwise may not be possible.  Borrowers can have the benefit of leveraging the strengths of their mortgage banker. These strengths include, experience, relationships, and expertise when problems arise.

Longevity- While age does not define someone, it sure is nice to know a lender has been through a few downturns and is strong enough to stand the test of time.  As Warren Buffett says, “Only when the tide goes out do you discover who has been swimming naked.”  Barry Slatt Mortgage was founded in 1971 and has been a leader in the industry for the past 45 years.  It is one of the longest standing mortgage banking companies in the West.

Tools Available – A lender is as good as their options.  Many lenders have one program or a couple options and they try to fit as many people into their box as possible, even if it is not a fit for the borrower.  It is the old adage, “If all you hold is a hammer, everything looks like a nail.”  The huge advantage of working with a mortgage banker over a bank or an independent mortgage broker is that mortgage bankers have exclusive relationships with correspondent lenders that are not available to others in the market place.  Barry Slatt Mortgage has been chosen by more than 12 life insurance companies to represent them in California and across the country.  They are able to offer these relationships in addition to numerous lenders located across the country that offer many different lending platforms.  These relationships are built on decades of trust and excellence.

Team – Obtaining a commercial loan is an extensive process.  It requires excellent market knowledge, skillful underwriting, an extensive knowledge of legal entities, leases, legal documents, escrow, title, insurance, and much more.  It is important to have problem solvers and creative thinkers rather than people who create problems.

written by:

Jeff Matlock
Commercial Mortgage Banker
matlock@slatt.com