Leveraging Private Mortgages
“Private Mortgage Financing Can Be Used To Secure Better Long Term Commercial Mortgage Rates”
One of the real challenges with acquiring commercial property when financing is going to be required is getting a commercial mortgage approved and in place in the time you have to work with.
Even when individuals have great credit and a strong down payment, the application, approval, and funding process through a bank can take 60 to 90 days and many sellers are not going to be prepared to wait that long.
And while residential mortgage financing is accepting of rate shopping, commercial mortgage lenders are not as open to the idea. Because of the large amount of work that can go into a commercial property financing assessment, if the lender finds out that the deal is being broadly shopped, they may decline you early on and save on their administrative efforts.
So if you’re only working with one commercial lender and your months into the process without a result, time is going to be working against you to complete the deal.
One potential solution to dealing with acquisition financing for a commercial property is through the use of a private mortgage.
A private mortgage lender can typically make a lending decision and get the deal funded within a 30 day period, allowing the deal to get closed and for you to take ownership of the property.
Once the property is secured, you can immediate turn to finding the long term financing solution for the property as the private mortgage is only likely going to be for a one year term. But one year is going to likely be sufficient time to not only locate and secure an institutional commercial mortgage, but to also negotiate the best possible deal for your business as now you don’t have a time pressure that puts you in a negative negotiating position.
The private mortgage may cost you a bit more for its short term use, but when you consider what even a 1/2% can add up to on a long term commercial mortgage over time, or even worse, the opportunity cost or operating costs associated with not closing on the property in the first place, a private mortgage can be a true bargain and deal saver.
If you’re looking to acquire a commercial property, or you’re in the middle of trying to arrange a commercial mortgage for a property that you have already made an offer on, I suggest that you give me a call so I can make a quick assessment of your situation and requirements and provide you with relevant private mortgage financing options for your consideration.
Click Here To Speak Directly To Private Mortgage Broker Joe Walsh