| Commercial mortgage loans are very different than | | | | Business and Personal Tax Forms - Back tax forms |
| residential mortgages. Residential loans are | | | | for both the business entity that holds title to the |
| underwritten primarily on the financial strength of the | | | | building and the borrower will be scrutinized by a |
| borrower. Commercial mortgage loans, | | | | potential lender; they will generally ask for 3 years |
| on-the-other-hand, are based mostly on the financial | | | | worth. They will look for hidden expenses that could |
| strength of building that's being financed; the borrower | | | | jeopardize the deal and will use the tax forms to verify |
| is of secondary importance. | | | | the validity of the information a borrower has |
| A commercial mortgage loan application package | | | | submitted. |
| focuses on determining whether-or-not a piece of | | | | Personal Financial Statements - Borrowers will be |
| property can pay its own mortgage each month. | | | | asked to submit certified personal financial statements |
| A Written Application - The commercial industry does | | | | to include statements of real estate owned. Lenders |
| not have standardized application forms like the | | | | want to be comfortable that their clients have a |
| residential side of the business does. Commercial | | | | sufficient net-worth to be able to support a loan and |
| lending is less regulated and lenders are free to | | | | ownership of the building. |
| develop their own application process. Many | | | | Third Party Reports - Lenders will order certain third |
| commercial mortgage lenders use the 1003 residential | | | | party reports in conjunction with the application and |
| application form in place of a commercial application, | | | | underwriting process. The most prominent and |
| others have developed their own forms. In-any-case | | | | important of these are an appraisal and an |
| borrowers will be asked to complete and sign some | | | | environmental assessment. At the lenders discretion |
| type of written application. The application serves to | | | | they might order other reports such-as feasibility |
| identify and describe the target property and show the | | | | reports and property condition assessments. |
| borrowers financial wherewithal. It also legally commits | | | | Unfortunately, borrowers will be forced to pay for |
| the borrower to telling the truth during the underwriting | | | | these reports. Depending on the size and scope of the |
| process. | | | | work done, third party reports could cost more than |
| Income Statements - Lenders will ask to see 3 years | | | | $10,000.00. |
| of a buildings net-operating-income statements, or NOI. | | | | A Survey - A recent, certified land survey or plat plan |
| These financial statements show revenue, expenses | | | | will be used to verify the legal boundaries of the real |
| and profit numbers for a particular building. They will be | | | | estate being funded and will document exactly what |
| used to determine how much money can be used by | | | | land and buildings will be included in mortgage |
| a borrower to make mortgage payments as-well-as | | | | covenants. |
| fix the overall value of the property. | | | | The commercial mortgage application process may |
| Rent Roll & Leases - A certified rent-roll and | | | | seem daunting to those not familiar with it, but, in reality |
| copies of all leases will be used to verify the income | | | | it is fairly straight-forward. Borrowers who understand |
| that a building produces and judge the quality of that | | | | what lenders need to see and provide them with the |
| income. Leases are preferable to month-to-month | | | | information they request will find the procedure less |
| rental agreements. Tenants may be asked to sign | | | | intimidating and will have a better experience obtaining |
| estoppels attesting to the validity of the leases. | | | | a commercial mortgage loan. |