Must pay attention to these key areas:
• Credit Score
While customers used to be able to justify low credit scores, nowadays it is strictly a matter of numbers. If your credit score is under 680, there is no doubt that you will find difficulties obtaining funding. While it will not rule you out from all lenders, it will limit the type of lenders that will be interested in your application.
• Repayment Options
All lenders want to see a minimum of two repayment strategies for the property. Number 1, of course the subject property and the famous "Debt Service Coverage Ratio". Minimum requirements have increased, make sure you consult with your favorite mortgage broker for constantly updated guidelines. Number 2, the principals involved in the transaction. Although previously personal debt and debt ratios were not a huge emphasis in underwriting, nowadays it is one of its main components. Sponsorship is a very important key element for decision makers.
• Exit Strategy
What are your plans with the property? Holding time, increase in income, selling strategy.
This requirement has increased generously throughout last year. While we were able to see combined LTVs with secondary financing or higher leveraged properties by the primary lender, NOW seeing the borrower vested in the property with a higher down payment is very important. Lenders don't want to take the majority of the risk anymore, shared risk and responsibility is a key element.
Experience has never been more important. But if you can't qualify to buy the property, how can you acquire experience? This is when partnerships or larger down-payments maybe a way to overcome this requirement.
• Lender Criteria
Because you have been a long term customer with XYZ Bank doesn't mean that they will offer the loan program that fits your property type and your borrowing qualifications/needs. Working with a professional that knows and understands each lender's criteria will save you a lot of time and money. Not all lenders have the same risk tolerance, some prefer to add to their lending portfolio multifamily properties, while others specialize in office/retail. Then again, those preferences may change according to market conditions or simply upon request of their shareholders.
• Package Preparation
Above all, the package preparation can make or break your deal. I always tell my clients: I work for YOU. I need to know everything about this transaction because we need to be able to show the lender that we are prepared for anything and when we present the package for review is the time to include any mitigating factors for the negative aspects of the deal.
Trust me, they will find out about it sooner than later and it is better to be prepared than to receive a turn down after deposits, appraisal and third party reports have been spent.
WHY WORK WITH US?
• Represent the borrower understanding his/her needs in detail.
• Package the deal and present it to the appropriate lender based on the strengths of the client. We work directly with a variety of lenders such as: wholesale commercial lenders, bank programs, private money, and insurance companies.
• Have a wide knowledge of different loan programs offered by different lenders so generally when the deal is submitted, it is practically already approved.
• By working with different lenders we can negotiate better pricing and loan terms for the client and we always have more than one source and/or pre-approval for each client and their loan scenario.
• Licensed by the Department of Real Estate.
Nicole Kayes, MBA
Global Funding Partners
(415) 474 7786