วันเสาร์ที่ 31 ตุลาคม พ.ศ. 2552

Commercial Mortgages - The 3 C's of Commercial Finance

เขียนโดย Chutinun Kruewan

In implementing the funding, it is important to note that lenders are only interested in making loans to borrowers, the sensible use of money. For most lenders, prepares the assessment of borrowers, the information on the three C's: cash, character and collateral.

Without these three conditions are met, you hard-pressed to obtain approval for your loan. This lesson summarizes the relevance of these critical factors.

Cash

Cash refers to the ability of your propertyto pay his debts out of the net disposable income or cash flow. Lenders want to know that you can understand and be realistic about the mortgage you think, do your business. Most of the time in the lender's underwriting process includes a thorough analysis of a real estate spending cash flows, costs and the potential cash flows. Properly prepared loan applications present lenders with a well-documented historical and projected cash flow. Are (In a forthcoming article, we examine how we can makeEnsure that your property has on cash flow and other cash requirements, a lender might have.)

Another crucial point with cash, that each lender will consider is connected, how much money the borrower at risk in the transaction. All lenders require that the quality of the borrowers who have at least 10 percent own money in the transaction. The concept of no-money is in commercial mortgage financing no practical reality. If you are not willing or able to invest money inYour project why should a bank all the risk? It is not.

Many will also check your personal financial statement, to determine that the loan you are asking is not greater than your personal assets - even if there are ways around, this requirement.

Credit

Credit provides lenders evaluate a mathematical way to your credibility as a borrower. Your credit score is the result of personal financial information and is on the past and present use of the baseCredit.

Any score over 680 easy to qualify for the mortgage you seek. And there are some commercial mortgage programs for people with credit scores below 650th However, interest rates are significantly higher and the loan conditions are more difficult.

It is also important to understand that in the commercial lending business, such as retail loans to look over your score lenders "credit" to try and determine your "credit" to. They are interested inMaintained to ensure understanding of the specific items in your credit report and that you will be able to, the ability to pay your new debt after the transaction is. For this reason, your credit score is more used as a filter to eliminate marginal transactions than it is to qualify a business. Potential borrowers with high credit scores are not necessarily considered "credit worthy" for a project.

Collateral

Collateral - the property of the mortgage - isthe heart of any commercial finance business. At the end of the day, lenders need to feel comfortable that in a worst-case scenario, they could liquidate the property and any proceeds they have borrowed again. Ensure that safety is an important element in the financing decision.

Commercial advice may be required to determine the security value of your property for the purposes of commercial mortgages. Do, so as not to make an assessment. Banks only acceptAssessments, they could be.

Also know that the bank will use the lower of the appraised value or your purchase price in determining the value of collateral for lending purposes. If the property you are purchasing has assessed at $ 1 million, but the price is $ 850,000, the bank will still charge their loan size based on the lower figure.

Understanding the 3 C's of commercial funding should help you understand a lender's decision making process. Would not youuse the same criteria, before making a loan if he repays the money at stake?



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