Home | Resources | Advertisement







Commercial Mortgage

While most of the popular mortgages these days are home mortgages, there are also many different commercial buildings that were purchased with a commercial mortgage.  If you are thinking about getting into the world of commercial property owners, you may wonder if there are any differences between commercial mortgages and home mortgages. 


First of all, no matter what type of loan you are getting, you will want to shop around for a good rate.  You can go to your local bank and look online to find the best rates available. 


One of the biggest differences you will find between a home mortgage and a commercial mortgage is the size of the loan.  The most obvious difference for this is the size of the actual building.  A single family residence is usually much smaller than an apartment complex, for example, so it is a given that the larger building will cost more and a loan to purchase it will also be much larger than one for a home.  When a large amount of money is being loaned by a financial institution, you will find that more documentation will be required and there is more red tape to wade through.  This is mostly because the larger loan constitutes a larger risk to the lender. 


Another big difference is the criteria which are used for the loan qualification.  When an individual gets a home mortgage or mortgage refinance, his personal credit score will help determine whether or not he is approved for the loan.  However, when a commercial mortgage is being applied for, the business credit score is used, and that can be very complex, especially when multiple investors are co-signing on the loan. 


When you are mortgage refinancing or looking at a bad credit mortgage, you will have to get an appraisal on your home.  A commercial mortgage will include a much more detailed and intricate appraisal before a loan can be approved.  Not only the building itself is appraised, but also the assets of the business, the business plans, and income and expense projections must be scrutinized during the qualification process. 


These differences may make it seem harder to get a commercial mortgage, but actually, it is not really any harder, it just requires more paperwork, which may make it take longer.  As soon as all of the paperwork has been processed and the business has qualified for the loan, the closing will happen.  Just like with a home loan, the business owners will go to a title company for the closing where the papers will need to be signed and the closing costs will need to be paid.