Commercial Mortgage Loan Pre-approval - An Exciting Phase of the Process
Congratulations are in order once you make it here! You’ve passed the commercial mortgage loan application phase with flying colors.
As long as the lender's due diligence doesn’t reveal any serious problems with you, the business, or the property you’ve got that commercial loan in the bag. So here’s…
Pre-Approved/Pre-Qualified. What does it really mean?
What’s expected of me once I’ve been approved for a commercial mortgage loan?
Pre-Approved. What does it really mean?
The pre-approval phase is exciting because it says you’re much closer to closing!
Sometimes business owners confuse a pre-approval with an actual approval.
What’s the difference?
A Pre-approval means that based on everything you’ve presented in your application, we are willing to finance your deal. There’s only one condition though.
You have to prove that everything you said in your application is in fact true.
You are not yet at final approval until that proof is provided and deemed satisfactory to the lender.
What is expected of me once I’ve been pre-approved for a commercial mortgage loan?
Now, all you have to do is, provide the documentation to prove that everything you stated on your loan application is true. Once all of that is proven to the lender, you’re as good as gold.
With that in mind, let’s review your pre-approval letter.
On the pre-approval letter there will be a list of “conditions.” Those are the documents needed before you can be approved.
All of the documents listed below aren’t requested on every single commercial loan. So view your pre-approval letter for the exact details.
Among the things you might find on the pre-approval letter are a request for…
Bank Statements for the last 30 days
To serve as proof of your assets. They should show enough in the bank to pay the mortgage for at least six months and the down payment (if applicable).
Business and Personal Tax Returns including 1099’s and W-2’s for the last 2-3 years.
Also Check Stubs for the last 30 days if applicable.
To serve as proof of your income, that you documented on your application.
A Copy of all Leases
This will prove that the rent roll is accurate.
Corporate Documents & Business License(s)
The lender will make sure you that your corporation is in compliance with federal and state laws for corporations, LLC’s, and partnerships.
It would be wise to makes sure your company…
This will reassure them that you have a business plan that’s sufficient enough to keep you in business for years to come.
Letter(s) of Explanation
If anything doesn't look quite right, they'll ask for a letter of explanation detailing why this or that has occurred.
For example, say your middle credit score is above 680 but you had a chapter 7 bankruptcy discharged five years ago. They'll likely request a letter of explanation to detail why you get the bankruptcy in the first place.
Proof of Insurance
The lender will need to see that you have secured hazards and flood insurance on the subject property for both a purchase and a refinance.
It ensures that no matter what happens they'll be covered (and so will you) if a disaster should occur to the property.
Get these commercial mortgage loan documents and any others requested, and you’ll soon find yourself at the closing table!
After receiving the pre-approval, many express this concern…
BONUS RECORDING - What if I need some help with turning in all of the requested documents because I haven’t filed my taxes yet, or because I have a balance due with my accountant?
Click above to listen in to our BONUS recording to get the real answer to that question.
If you have any other questions about today’s material…
Feel free to call us at (800) 778-5361 anytime 24 hours a day, 7 days a week and ask us any question that you like.
Be certain to request our Free Pre-Application Consultation Program.
Also, on the pre-approval you will find requests for documentation that you alone can’t provide.
Instead the processing department will have to gather these documents.
Let’s head over to processing now to find out what these documents are and what lenders expect to see regarding them.
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