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Commercial Mortgage

You might think that getting a mortgage for a commercial property is the same as getting a home mortgage, but there are a few differences. If you are looking for commercial property, you will want to look into some of the differences, because you might be familiar with some of the processes of a home mortgage already. 


Shopping around for a good interest rate is important no matter what type of loan you are looking into. There are many financial institutions that will be competitive in giving you a good rate, so do not be shy about your hunt for a good rate. 


One difference in these two mortgages is what you have to do to qualify for a commercial loan. If you get a home mortgage or mortgage refinance, your credit score will be a large factor in determining if you will qualify or not, but with commercial property, the credit score from the business will be a major factor, even considering any co-signers or multiple investors. 


A commercial property mortgage will typically be a lot larger than a home mortgage, because commercial property is often larger than home property. The actual building is usually larger for a commercial mortgage, making it necessary to get more of a loan so that you can purchase it. There will need to be more documentation than when getting a home mortgage, because the amount of money will be larger, so there will be more work for you to do to get to the actual loan. Lending money for a commercial property is a larger risk for a lender than lending for a home mortgage. 


If you are doing mortgage refinancing or if you have bad credit, you can simply get an appraisal on your home to see if you will be able to qualify. With commercial loans, they will do a much more thorough investigation before approving anybody for a loan. The building will obviously need to be appraised, but also the company’s assets, the business plans, income, and expense projection will be heavily looked at to add to the decision of qualification.  


After reading all of these differences, you might think that it will be too hard to qualify for a commercial mortgage, when in actuality it is not much harder than getting a home loan. There will be more documentation and ore paperwork, making it take a little bit longer, but besides that, you will close on it just like you closed on your home loan. The business owner will then go to the title company so that they can sign the papers and pay the closing costs.