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Commercial Mortgages

May 27, 2008  |  Difficulty: Easy

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Commercial mortgages are the same as a home mortgage; the only difference is a commercial mortgage is for commercial properties. A commercial property is a building that will be used for mainly business purposes. An example of a commercial property would be an office building, a hotel or a shopping center. Commercial mortgages are used to replace construction loans, when the construction loan was used to build a commercial property.

You can get an adjustable commercial mortgage or a fixed rate commercial mortgage. The span of the loan can be between 5-30 years, and the due payments are typically monthly. All of the rules and regulations for a housing mortgage still apply to a commercial mortgage. The only difference is the business property acts as the collateral.

The great aspect of commercial mortgages is that the interest rates are usually lower than the mortgages for housing!

How does one obtain a commercial mortgage? It’s the same process as obtaining a home mortgage. You can even use the Internet as a tool to search for a quality commercial mortgage lender. You can then compare quotes to determine who will give you the best deal.

The worst aspect of commercial mortgages is that lenders are a little bit more finicky about giving money to a commercial borrower. The lender will want more details, such as the particulars of the business venture, business records, who will occupy the building and other information that is applicable to your business idea. They go through this process to evaluate how solid your business will be before they give you the money.

Just as within the home mortgage business, there are different types of commercial mortgage lenders that you can chose from. There are “A,””B” and “C” type lenders. This means that if you don’t have all the goods to qualify with an “A” lender, you have the chance that you will be desirable to a “B” or a “C” lender. “C” lenders tend to accept more “risky” clients that the “A” and “B” lenders tend to turn down. No matter where you qualify, shop around for the best rate. You might find that a “C” lender will give you the best possible interest rate.

If you still need help finding a lender, contact a mortgage broker. A broker can help you to find the right lender that fits your needs. Still you need to do your homework. You should not take the first offer that the broker gives to you; rather you want to compare different lenders to get the best offer. You want the best deal for you, not the best deal for the broker.

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