Applying for a conventional or private commercial real estate loan can be a complicated, and at times intimidating process. However, knowing the questions to ask your broker or loan officer can save you time and money, and may streamline the process considerably.
An experienced broker or loan officer can be invaluable in helping you determine the type of financing that may be right for you and your project.
“Are you a direct lender?”
Working with a direct lender versus a commercial mortgage broker may significantly impact the fees you pay to obtain a loan. Some less reputable brokers may even hold themselves out to be lenders. However, dependent on your needs, a well-connected broker may be a significant asset, especially if your loan request is near bankable or very large and your broker can connect you with life companies or pensions that may lend at lower rates.
“Can you provide me references?”
This is an especially valuable question to ask of private lenders, who don’t have the same regulation and oversite as bank lenders. A lender worth their salt should be willing to provide references of other clients for whom they have funded similar projects if requested.
“Can you provide a list of all documentation you will require for underwriting?”
As you get closer to selecting a lender, request a comprehensive list of all required documentation – this will streamline the underwriting process for you and the lender and hopefully avoid any last-minute requests causing delays.
“How do you handle construction draws?”
If you are seeking a construction or renovation loan, construction draws are a key topic for discussion. Specific questions to ask may include:
- What is the draw schedule?
- How are inspections handled?
- What are your draw/inspection fees?
- What documentation is required to request a draw?
- How quickly are draw funds released?
- What happens if a line item is over budget?
“What are your approximate terms (beyond just rates)?”
A lender’s rates, fees, and required loan-to-value (LTV) are of course significant, but when seeking a commercial real estate loan, inexperienced borrowers often neglect to inquire as to other key terms, including:
- Loan term
- Amortization and potential balloon payment
- Other loan costs
- Recourse
- Extensions
- Standard default provisions
At Juniper Capital we strive to be a source of valuable information and expertise in the world of commercial real estate finance. Have a question? Call us today to speak with one of our experienced loan officers and to determine if Juniper is the right fit for you.
