If you have ever thought about financing a commercial real estate property, the thought of using a loan brokers may have crossed your mind.
By: Phoenix Lee/
However, if you are like some people, you may have debated using loan brokers based on the belief that it is more expensive to use a broker rather than go directly to a lender. This common belief is a myth.
The reality is that there are a number of ways in which you can save money by engaging a mortgage broker to provide assistance with your commercial real estate financing needs and objectives. If you take the time to determine the value of using loan brokers you will surely see that it is money well spent.
Locating a Lender Locating a lender to fund your commercial mortgage is not as easy as it may seem. Due to the wide range of property types, loan types and special circumstances, a single lender simply cannot offer loan programs for all potential loans. You may waste a considerable amount of time simply trying to find a lender that offers the program you need.
Qualified and experienced loan brokers will have multiple lender relationships in place who can offer a wide range of lending options.
Loan brokers may even have relationships in place that give you access to hundreds of other lenders offering an unbelievable amount of loan options.
Risks in working with a Single Lender You may spend the time and locate a single lender that can meet your needs, but you are not out of the woods yet. By working with a single lender or bank you are putting all your eggs in one basket. The approval process can take a good deal of time that you may not have. Then what happens if the loan application is not approved by that lender? Can you afford to go through the process a second time risking a similar outcome? By working with loan brokers, your loan application can be submitted to multiple lenders. This not only increases the chances that your loan will be funded, but it also gives you and your broker more bargaining power to get the best deal.
Cost Variations between Lenders One of the most significant ways in which you can save money by using the services of loan brokers rests in the fact that there can be notable differences in the interest rates, costs and other fees charged from one lender to the next. Loan brokers will help you in identifying the most reasonably priced options available from these different mortgage lenders. On first blush, the cost differences from one lender to another may seem small. But remember, in most instances we are talking about loans in the millions of dollars. Even if the interest rate difference is minimal on the surface, over time this can add up to a significant amount of money. Active loan brokers are often times provided special rate options based on the volume of business they bring to a lender and this rate savings is passed along to the borrower.
Support Services Another avenue through which a loan broker can help you save money is through their existing relationships with other industry professionals. A good broker broker has a pre-assembled network of professionals including appraisers, accountants, lawyers and other service providers that they work with on a regular basis. Not only do you not have to spend the time to find these required resources on your own, but often times you can get a reduced rate on the services due to the brokers existing relationship.
Furthermore, good loan brokers will have a staff of professionals to see the loan through to the closing. Securing a commitment is half the battle. It takes a village to get to the closing efficiently.
Fees of Loan Brokers It is true that in the end, you do not pay a fee for utilising the services of a loan broker. And you will find, as many commercial investors have in the past, that working with a loan broker will help ensure that your needs are met and that you get the best deal in the process. The bottom line is that what you are not even paying for is a professional on your side, someone to watch out for your best interests. Similar to the way a lawyer protects your interests in legal matters. You wouldn’t go to court without a lawyer, so don’t finance your commercial mortgage without a broker.
A professional loan broker will have solid relationships with numerous lenders and will immediately match you up with the best lender based on your needs. Whether you are in need of a construction loan, long term fixed rate loan or bridge loan, a qualified broker will be able to provide guidance in choosing the best lending source. If timing is an issue, the broker will be able to leverage their long term relationship with the lender to garner “express” processing of your request. Everyone needs an advocate at times – a loan broker is your advocate in navigating the commercial lending marketplace.
The major strength of loan brokers is that they can shop the wholesale mortgage lenders for the best rate much easier than a borrower can. They also learn the “hot points” of certain wholesale mortgage lenders and can handpick the lender for a borrower that may be unique in some way. He will be able to advise you whether your loan should be submitted to a portfolio lender or a mortgage banker.