How To Apply For A Commercial Mortgage: It’s More Personal Than You Would Think

If you have decided to try your hand in the commercial real estate market, you will undoubtedly need a commercial mortgage in order to get things moving forward. This can be a daunting process, but you can build up your chances for success and negotiating power.

Securing funding for commercial real estate investments is probably the single most challenging aspect for those who wish to break into the market of multi-family homes or commercial properties. It only makes sense that it is a thorough process, as there are often millions of dollars on the line. However, proper preparation will not only help a potential borrower increase the chances of success, it will also reduce the stress and tension associated with the process.

Here are a couple of easy steps to follow to begin getting prepared for your commercial mortgage.

Personal Finances – While most loans do not require the borrower to tie up their personal finances, that does not mean that they are not important to lenders. Having your personal accounting in order will make a big difference to lenders. It is very important to focus on your experience as an investor and to highlight your proven successes. You will also be subject to various background and credit checks by lenders to ensure that you are not a high-risk borrower. If you have any potentially damaging elements from your past, it will be critical to address them quickly and honestly. An even better approach is to simply be upfront about them. This will establish trust and prevent a lender from being surprised.

Credit Score – It is a given that this will be checked by lenders and will be an important element in a decision about a commercial mortgage. If your credit score is sub-optimal, meaning below 680, know that you are going to have a difficult road ahead of you. It would be wise to do anything and everything that you can to raise your credit score in preparation for the rigors of obtaining a commercial mortgage. This is another aspect of applying where honesty is going to be one of your best allies. Your credit report will reveal basically everything, so being open and upfront with your lender about any potential problems is only going to work in your favor. They will find out anyway.

Experience In Commercial Real Estate – It only makes sense that lenders would rather extend a loan to an individual or business that already has plenty of experience, and a track record of success in the market. Lenders want to know that you are going to properly manage both the financial aspects and oversight aspects of a commercial real estate venture. If you have a series of successes under your belt, be sure to highlight that, but if you don’t, it’s not the end of the world. Focus instead on how you are competent and excel in managing large operations. Another strategy would be to focus on the skills and experience of the team that you have assembled.

Why do lenders care about the personal aspects of a commercial mortgage borrower?

Even though individual assets are not tied up in a commercial mortgage, lenders still want to know the person with whom they are dealing. They are looking for trustworthiness, responsibility and experience.

Dennis Mortgage Broker ArizonaDennis Dahlberg Broker/RI/CEO/MLO
Level 4 Funding LLC  Private Hard Money Lender
Arizona Tel:  (623) 582-4444
Texas Tel:     (512) 516-1177 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.