Considering buying commercial property in Minot? Make sure you are prepared financially.
Residential loan in that the terms in the requirements for applying for a loan are different. Typically, a residential loan will be easier to obtain and you'll need less down payment than on a commercial loan. While residential loans understand that you will be living in or renting out the home for living purposes, a commercial loan will require you to explain and map out the future growth and potential of the commercial property.
There is typically a higher risk for a commercial loan than a residential loan and the lender will typically acquire some equity to be paid down by the borrower ahead of time. Commercial mortgages and loans generally have a higher interest rate but shorter terms. Because of the smaller secondary market for commercial loans, lenders need to know that they can recoup their capital investments by selling these loans if necessary and the options to do so are greatly reduced over a residential loan.
In preparing to apply for a commercial loan you will need to prove to the lender that you have well documented cash flow reports for the last three years, it helps also to have your own real estate investments with documentation, and to be sure that you go with the lender that is well versed in commercial mortgages. You will want to build a relationship with your lender in a much different fashion than a residential mortgage. Securing funding for your commercial property may be difficult but it will be one of the greatest steps in achieving a commercial loan.
Be sure to have all of your documents, assets and liabilities, and financial information prepared and documented to present to the lender. You'll want to show that you are responsible financially as well as have a plan in place for future growth and development of the property. Make a list of how much money you'll need, what you're going to do with the money, how you repay the loan, and any plans you may have if you don't get the loan.
You may also have to apply to several different banks and commercial mortgage lenders before you find one suited to your needs, rates, and applications. It's best to have a plan of action for every contingency that may arise. Lenders want to know that although this may be a risk, you are well prepared for a variety of variables that may come along.
If you're interested in learning more about commercial loan for Minot property, contact us today. We specialize in commercial property and real estate for the Minot North Dakota area. We want to provide you with all the necessary resources and listings to help make the process smooth and satisfactory.