Overview – Mortgage Brokers
Okay, let's assume that a borrower or real estate broker has just called you in search of a commercial real estate loan. He wants a commercial loan rate quote, and you don't have a specific lender in mind. What do you quote him?
The good news is that most A-quality lenders (typically commercial banks on deals of less than $3 million) have commercial loan rates that are within 1/4% of each other. In other words, Bank A is not going to be quoting 6% while Bank B quotes 4.5%. Their rates will be within 0.25% of each other.
Here is exactly what you need to quote:
- To get the correct interest rate to quote, go to this Table of Current Commercial Mortgage Rates. It should be exactly what you need. Be sure to add the extra 50 basis points (translated into English 50 basis points means 1/2%) if the loan is less than $2 million.
- On multi-family deals (apartments), you will quote a 30-year fully-amortized loan.
- On commercial properties, quote a loan that is amortized over 25 years and due in 10 years. Just like 30 years is the most common amortization for home loans, 25 years is the most common amortization schedule for commercial properties. If the property is older than 40 years, the bank might require a 20-year amortization.
- Most A-quality multi-family and commercial lenders quote a loan fee of one point. As a broker, you have to add your loan brokerage fee on top of that.
- Most commercial loans today are written on a fixed rate basis. The rate will readjust typically every five years. There will definitely be some sort of prepayment penalty. I recommend that you quote 3%-2%-1% in year 1, 2 and 3 and none in years 4 and 5 of each 5-year term. Lenders are all over the board on prepayment penalties; but at least this way you are warning your borrower that there will be some sort of prepayment penalty.
Now that you have something to quote, how do you actually start the commercial loan application process? In the upper-right-hand corner of this page you'll see a mustard-colored Apply NOW button. If you click that button, you'll be taken to commercial mortgage heaven. C-Loans.com is a free commercial mortgage portal where you can enter just one little mini-app describing your commercial loan needs. For example, you might need a $1.2 million refinance of your borrower's strip center in Phoenix, Arizona.
C-Loans will then sort through its database of 750 commercial real estate lenders and produce for you a customized Suggested Lender List of 20 to 30 suitable lenders. You put a checkmark next to the six most attractive lenders and then press Submit. That one little mini-app works for all 750 of our lenders. Within minutes our hungry commercial lenders will be contacting you with offers. And remember, C-Loans is free! (Our lenders pay us to use our software.)
So does C-Loans work? C-Loans has closed more than 1,000 commercial real estate loans totaling over $1 billion! So when you're ready, please be sure to click on that mustard-colored Apply NOW button in the upper-right-hand corner.
CommercialMortgageRates.co is owned by C-Loans, Inc., a Sacramento-based software development company. C-Loans, Inc. is the sister company of Blackburne & Sons Realty Capital Corporation, one of the oldest surviving private money (hard money) commercial mortgage companies in the country. Blackburne & Sons was founded in June of 1980, making the company over 35 years old. The C-Loans® Commercial Mortgage System was created in 1999.
George Blackburne III, Esq.
BLACKBURNE & SONS REALTY CAPITAL CORPORATION
4811 Chippendale Drive, Suite 101
Sacramento, CA 95841