Finding success with commercial mortgage closings is easier than you might think – but to close them like a true mortgage pro, you first have to master the makeup of a typical deal. To help you better understand the art of closing commercial loans, we’re dissecting one case that featured major wins for both the borrower and the broker.
Let’s start simple. Here are the closed loan highlights:
Closed Loan in Long Beach, CA
Now let’s break it down further and explain why this specific deal was so successful.
It’s easy to identify residential loans – they’re all homes. On the other hand, commercial properties come in all shapes and sizes. One property type you can expect to find in many loan scenarios is the Multifamily building. The key feature of this property type is the number of units – when you see 5 or more units, you know you have a commercial deal on your hands
The subject property for this deal was a 4,920 square foot Multifamily building with 8 units in Long Beach, California.
Side note: If you’re looking to make the switch from residential to commercial, these are the perfect properties to begin with because of their similarities to residential buildings. It’ll be easy for you to identify the general layout and characteristics of the property.
Purpose & Term:
The owner in this instance was an investor looking to tap into the equity they had built into their Multifamily property through a cash-out refinance.
A non-bank lender like Silver Hill Funding, LLC sees a great deal of cash-out refinance requests because traditional lenders often impose limitations on the cash-out amount or the use of funds.
With no cash-out limit and reduced documentation options available, we’re often the best fit for investors looking to make their next purchase or improve key aspects of the subject property.
In this case, the borrower was also able to lock in their low rate with a 30-year fixed rate mortgage. In the past, most commercial loans were short-term mortgages with balloon payments. With 30-year fixed options available, commercial loans look more like the residential mortgages that borrowers are likely more familiar with.
To sum up, the investor in this case walked away with the following 3 big wins:
- Accessed equity from the investment property
- Secured a low rate
- Locked in that low rate and achieved stability with a 30-year fixed rate loan
Of course, the borrower wasn’t the only party to benefit on this loan. The broker enjoyed a significant payday as well.
As a well-capitalized direct lender with self-securitization capability, Silver Hill is able to get out of the way and let brokers earn big on closings. That’s why we charge no lender origination points on our fundings.
Instead, brokers who transact with us determine the origination fee – up to 3 points. This flexibility makes it easier for brokers to win deals and stay profitable.
We also give brokers the ability to charge up to 2 points in yield spread, which is paid outside of closing.
How much a broker earns on a deal with us is ultimately up to the broker – they need to arrive at an arrangement that keeps the loan affordable for their client while maximizing their own bottom line.
The broker for this deal earned 2 points, or $14,600, on the front end and 2 points in YSP for a total fee. But that’s not all – since the broker took advantage of the free point promotion we ran earlier this year, they were able to earn an additional $7,300 for a grand total of $36,500. Nice work!
Originators who are new to commercial lending should note that fees and compensation aren’t established at the broker approval stage – you are free to set your payment structure however you need to on each loan you close with Silver Hill.
Every deal that will come across your desk will be unique, and because of that, each requires a specific solution. With the right partner on your side, you can offer your clients a wide range of loan programs that fit their mortgage needs while helping you grow your pipeline.
Contact us today to grow the commercial side of your business. Here are simple next steps depending on your current relationship with us:
- Already approved with Lakeview Wholesale? Now that Lakeview Wholesale and Silver Hill Funding have joined forces, approved brokers are able to close commercial loans without any additional lender approval. Talk to your Account Executive to get started.
- New to us? If you plan on closing residential loans with our Wholesale Network, your first step is to get approved. Tell us a bit about yourself using this link and we’ll take it from there: https://shwholesale.com/apply
- Simply interested in closing commercial loans with Silver Hill Funding? Visit https://silverhillfunding.com/ to learn more about our wide range of small-balance programs. If you’ve never worked with us before, you can fill out a contact form and one of our experts will be in touch with you right away.
Silver Hill Wholesale Network Disclaimer:
Copyright 2021 Silver Hill Wholesale Network. All Agency products are offered through Lakeview Loan Servicing, LLC. NMLS #391521, 4425 Ponce de Leon Blvd, MS 5-251, Coral Gables, FL 33146. All Non-Agency/Jumbo products are offered through Community Loan Servicing, LLC. NMLS #2469, 507 Prudential Road, Horsham, PA 19044. All Commercial products are offered through Silver Hill Funding, LLC. NMLS #1564077, 4425 Ponce de Leon Blvd, Coral Gables, FL 33146. Arizona-Commercial Mortgage Broker License #0944445. All are Equal Housing Lenders.
All programs referenced herein are offered to qualified lending institutions only and are not applicable to the general public and/or individual consumers. www.nmlsconsumeraccess.org. Programs may be cancelled or modified at any time without prior notice. Programs may not be available in all jurisdictions.