Page 1

Commercial Mortgages - The 3 C's of Commercial Finance When the pursuit of financing, it is important to remember that lenders are interested in doing loans for borrowers who only handle money wisely. For most lenders, borrowers evaluation boils down to three C: cash , character, and collateral information . Without these three elements in place, you'll be hard-pressed to get the approval of your loan . This lesson summarizes these key factors of relevance. Cash Cash comes to your property’s ability to repay its debt from the available net income or cash flows. Lenders want to know that you understand and face the reality; you think your business can afford the mortgage. Most of the time , the lender involved in the underwriting process takes an in-depth analysis of the property 's cash flow , expenses and cash flow potential . Ready lender loan requirements are currently well documented historical and projected cash flow information. ( In a future article , we will explore how to make sure your hotel has a cash flow and meet other cash requirements related to the lender may have. ) Cash, every lender will consider another important project is related to how much money the borrower in the transaction risk . All quality lenders require you , the borrower , have their own money , at least 10 % of the transaction . No commercial mortgage loans under the concept of money are not a reality. If you are unwilling or unable to invest the money into your bank put all items why risk it? Will not. Many people will also review your personal financial statements in order to determine the loan you have requested is not greater than your personal net worth - although there are ways to bypass this requirement. Credit Provide credit lenders to measure your credibility as a borrower mathematical methods. Your credit score is the result of your personal credit history is based on your past and present credit use . Any score above 680 you will easily qualify for a mortgage you seek. And there is still available for people to use credit scores below 650 lower commercial mortgage plans. However, a significantly higher interest rates, loan terms are more difficult. It is equally important to understand that in commercial loans, as opposed to residential loans, lenders beyond your “credit score " , trying to determine your " credibility ." They are interested in understanding the specific items on your credit report and make sure that you will be able to maintain the ability to pay for your new debt after the completion of the transaction. Because of this, your credit score is used more as a filter to eliminate marginal trading, but to qualify for the deal. Intends to borrowers with high credit scores are not necessarily considered to be a "good reputation" of the proposed transaction. Collateral Collateral - the property is secured - is the heart of every commercial financing transactions. At the end of the day , the lender needs to feel comfortable, in the worst case , they can liquidate and recover the proceeds of any property they may have lent . This makes it an important factor of collateral in the

financing decisions. Business assessment will need to determine the purpose of commercial mortgage loans, mortgage value of your property. Myself not to order an evaluation. Banks only accept assess their own command. Also know that determine the value of the loan collateral purposes, the bank will use the appraised value, whichever is lower or your purchase price . If you purchased the property has been assessed at 100 million, but $ 850,000 of the purchase price is based on the lower value of the bank will always calculate the size of loans. Understanding the 3C 's commercial finance should help you understand the lender's decision-making process . Before making the loan will not use the same standard, if it is your money at stake? For more information you can check out at

Read more
Read more
Similar to
Popular now
Just for you