For virtually any commercial real estate need, you’re going to need financing. The better prepared you are for this step, the better the results you get. In turn, qualifying for a great loan can help your business immensely. Not only can it potentially save you a considerable amount of money, but it can also help your project go more smoothly. Avoid these common mistakes and see the advantages for yourself.
Applying for Commercial Real Estate Loans With Tons of Lenders
Arguably the most common mistake for any type of loan is applying with every lender in town. This happens because business owners think they can maximize their chances of getting approved if they fill out an application at more places. In theory, this makes sense, but in practice, it’s a nightmare.
Every time you fill out an application for a real estate loan, the lender must perform a pull on your credit score. If you have several credit checks in a short time frame, it can hurt your score a lot.
The good news is that there’s a difference between pre-qualifying and applying. Make sure the lender doesn’t run a credit check until you’re sure you want to take the next step.
Being Afraid To Ask Questions
Even though you don’t want to be running all around town, you should still ask questions about commercial real estate financing and the lender you’re thinking of working with. The details of financing can vary considerably, so it pays to check the fine print.
What are good signs of a professional, trustworthy and helpful lender? One is the way your questions are received. Great lenders don’t have a problem answering your questions. They don’t talk down to you or treat you like you’re irritating them by wanting to know more.
Instead, a good commercial real estate lending knows how important your business is to you. Financial advisors should actively listen to your concerns, find out more about your business goals and help you choose financing solutions that fit your needs for monthly payments and down payment considerations.
Not Having Money for a Down Payment
You should always save up ahead of time for any real estate project. The more funds you have available for a down payment, the easier it is to benefit from real estate financing.
Even though you may not need more than 10% to qualify, a down payment of 15% or 20% can give you better interest rates that save you thousands of dollars or more in the long run.
