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Commercial Mortgage  

 

When people think about mortgages, they instantly think about home loan, but what about the large commercial buildings that we see?  These buildings too have mortgages, but they are usually of a different caliber as they are called commercial mortgages.   What are the differences between a commercial mortgage and a residential mortgage you might ask?  To find out, let's go over the key components that make up a residential mortgage as opposed to a commercial mortgage. 

 

One of the biggest differences between a mortgage refinance on a home as opposed to a building is the things used to qualify for the proceeding of the mortgage.  For example, on a residential mortgage refinancing option, a person's personal credit history and score is used to be able to determine whether or not they qualify.  On a commercial mortgage, a business credit score is used, which can be quite complex if several investors are being co-signed in order to ensure the repayment of the loan.   

 

Another large difference between these two loans is that residential mortgages usually have much lower loan amounts than business commercial loans.  The biggest reason for this is that homes are usually much smaller than huge commercial buildings, so it is only natural that more money would be needed in order to finance a commercial size building.  This requires extra red tape as a larger amount of money is being lent.  This extra qualification process is usually caused because the lender is taking a larger risk by lending out a larger amount of money for a commercial building.   

 

Commercial loans also require a much more detailed appraisal as commercial buildings can be spaced out very far apart. Not only is a bigger appraisal required, but business plans, assets, and all kinds of income and projection information are needed from the business in order to convince the lenders that the loan will be repaid. While it sounds like commercial loans are harder to get, this is really not the case. The biggest difference is that much more paper work has to be done in order to get the business who is proposing to get the loan to qualify. Once this qualification happens, the loan closes just like any other loan would, through a title company. When looking into a commercial mortgage, your credit must be incredible, which is very different from a bad credit mortgage program that residential loans offer. By doing you research and finding the low rates out there, commercial loans can be obtained for a very affordable amount.  

  

 

  10 Steps to Home Ownership:

Step 1: Are You Ready?

Step 2: Hire a Realtor

Step 3: Get Loan Pre-approval

Step 4: Search for Homes

Step 5: Choose a Home

Step 6: Obtain a mortgage

Step 7: Make an Offer

Step 8: Insure Your Home

Step 9: Close the Deal

Step 10: Avoid Foreclosure

 

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