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Commercial Real Estate Mortgage Loans
Author David Schneider | Nov 14,2007
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Financing commercial real estate purchases is not as easy as financing residential real estate. This is because commercial real estate transactions are slightly more complex than residential real estate transactions, and because commercial real estate tends to be more expensive than residential real estate. Before you talk to a commercial real estate lender you need to learn more about commercial real estate mortgage loans.
Qualifying for a Commercial Real Estate Mortgage Loan
When applying for a commercial real estate mortgage loan you will need to gather several pieces of financial information about yourself and about your company. Lenders are first going to look at your company’s finances. They will most likely look at the credit rating of your company, your company’s tax returns, your company’s financial reports from the last three to five years, at your accounts receivable and at your company’s debts and assets. They will also most likely examine the personal finances of the company’s owner(s). If you are the company’s owner then a lender will need to examine your FICO score, your credit history, your debt-to-assets ratio and at the assets that you have.
Collateral for a Mortgage Loan
While residential real estate mortgages will generally use the home being financed as the collateral for the loan, commercial real estate mortgage loans may also request other company assets be put up to guarantee the loan. If the loan is over a million dollars, or if the investment property is a high risk investment, then personal assets may also be required as collateral for the loan. Some of the items that can be used for collateral include: equipment, vehicles, other real estate properties and investment products like stocks and bonds.
Financing commercial real estate purchases is not as easy as financing residential real estate. This is because commercial real estate transactions are slightly more complex than residential real estate transactions, and because commercial real estate tends to be more expensive than residential real estate. Before you talk to a commercial real estate lender you need to learn more about commercial real estate mortgage loans.
Qualifying for a Commercial Real Estate Mortgage Loan
When applying for a commercial real estate mortgage loan you will need to gather several pieces of financial information about yourself and about your company. Lenders are first going to look at your company’s finances. They will most likely look at the credit rating of your company, your company’s tax returns, your company’s financial reports from the last three to five years, at your accounts receivable and at your company’s debts and assets. They will also most likely examine the personal finances of the company’s owner(s). If you are the company’s owner then a lender will need to examine your FICO score, your credit history, your debt-to-assets ratio and at the assets that you have.
Collateral for a Mortgage Loan
While residential real estate mortgages will generally use the home being financed as the collateral for the loan, commercial real estate mortgage loans may also request other company assets be put up to guarantee the loan. If the loan is over a million dollars, or if the investment property is a high risk investment, then personal assets may also be required as collateral for the loan. Some of the items that can be used for collateral include: equipment, vehicles, other real estate properties and investment products like stocks and bonds. |
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