Applying for a commercial mortgage can be a daunting task and one that requires significant documentation. At Stronghill Capital, we strive to make the process as painless as possible. In order to make sure things go smoothly, we rely heavily on assistance from our mortgage broker partners.
At Stronghill Capital, loans for mixed-use properties fall into two broad categories. The first is residential mixed-use commercial, typically apartments over retail. The other category is commercial mixed-use properties, which can include any property that functionally integrates a mix of two or more asset types. These might include a combination of apartments, retail, office and/ or flex/ industrial space.
Stronghill Capital is a national leader in providing borrower-friendly mortgage loans in the highly lucrative, but hard-to-finance, 2-8 unit residential mixed-use niche. Additionally, Stronghill offers attractive and innovative financing solutions for traditional commercial mixed-use properties.
Here are five important steps to a smooth closing.
Step 1: Submit a complete package
Stronghill’s process and documentation requirements vary significantly between our Investor Residential and Core Commercial business lines. In general, the borrower should expect to provide the following:
- Loan Application
- Credit Authorization
- Rent Roll
- Property Operating Statements
- Tax Returns (when applicable)
By submitting everything at once, time spent continually requesting additional documentation is reduced, making the approval process faster.
Step 2: Share the complete story: the good, the bad & the ugly
The more we know upfront, the better we’ll be able to serve the borrower’s needs. Potential issues might include concerns about the collateral or the borrower’s credit worthiness. Investors with low FICO scores or with limited investment experience may face more obstacles when applying for a commercial mortgage. Brokers can help their borrowers boost their chances of getting approved by:
- Knowing the collateral. Is it in average or better condition? Occupied? Are the tenants paying rent?
- Understanding FICO scores. Can they be improved, before applying, by things like paying down unsecured debt?
- Discussing their real estate investment acumen. Experience matters. Adding a more experienced investor or co-borrower is sometimes an option.
- Discerning their investment objectives. What type of leverage makes sense? Agreeing to a larger equity contribution/ down payment or higher interest rate for more LTV, are important considerations.
- Helping them identify the right investment opportunities. Selecting a less expensive property is sometimes the best path forward.
Even if your borrower feels embarrassed by something in their current situation, encourage them to share it. By knowing all details upfront, we’ll have a better idea of how to structure financing options.
Step 3: Allow us to explain our financing
Stronghill offers both 30-year fixed-rate loans and traditional commercial term debt. To determine which is ideal for your borrower depends on both the borrower’s individual situation and the unique characteristics of the underlying property. We will guide you to the best option for your borrower and help you sell the idea to your borrower!
Step 4: Act quickly – rates are on the rise
The Federal Reserve raised rates in February 2022, and the central bank could raise rates six more times within the year. With inflation at 40-year highs, nearly everyone expects the Fed to raise rates aggressively. While the Fed doesn’t directly control mortgage rates, it does create an overall interest rate environment.
To ensure your borrower gets the lowest interest rate possible, our originators and analysts are here to help and move your deals quickly to closing. We lock in rates at quoting, meaning that your borrower’s loan rate isn’t affected once the deposit is paid if rates rise.
Step 5: Respond promptly to documentation requests
The faster we can build a complete credit file, the quicker we can close your loan. Borrowers and their mortgage brokers should expect some follow-up questions from us, so be ready and willing to provide additional documentation. We promise we’re not trying to make things difficult. Our goals are aligned with yours, to provide capital on the most attractive terms possible.
At Stronghill Capital, we strive to protect our brokers and their borrower’s best interests and make the process faster, easier, and more efficient. By following these simple steps, you can help your borrowers reach their real estate investment objectives. To find out more about “The Stronghill Advantage” and how we can help you help your borrowers, contact us.
