For many commercial mortgage borrowers, refinancing a ballooning note can be a challenge. Once the lender calls the note due, they have a limited amount of time to provide the funds to pay off the loan. In this situation, a non-conforming commercial mortgage lender that offers fixed and fully-amortizing programs could be a great alternative for your borrowers.
Why a fixed and fully-amortizing solution might be better for your borrowers:
There won’t be any surprise rate increases.
If your borrower is looking for more control of their financial situation, a fixed-rate commercial mortgage is a great option. The rate will be a bit higher than the rate they’d start with in an adjustable-rate mortgage, but in an uncertain rate environment, no surprise increase in the interest rate could be exactly what your borrower needs.
The monthly payment will stay the same.
Because your borrower’s rate won’t change through the life of the loan, their monthly payment will remain consistent. They won’t ever need to worry about where they’re going to get the extra money to pay their commercial mortgage should rates increase.
There’s no pressure to refinance quickly.
With a ballooning mortgage, your borrower generally has a couple of years to determine how they’re going to refinance. When you guide them to fixed and fully-amortizing commercial financing, they won’t need to worry about the note coming due and needing to make a large payment in the future. This kind of security is valuable to many borrowers in today’s market.
What you’ll need to begin refinancing your borrower’s ballooning mortgage:
- A completed 1003 or mortgage application: The more complete the application, the more quickly your lender can provide your borrower with the funds needed to pay off their ballooning commercial mortgage.
- A credit report with scores and trade lines: Make sure the report is recent and be prepared to discuss the borrower’s history and financial situation in detail.
- A summary of the deal: Explain that your borrower is looking to pay off a ballooning commercial mortgage, and include any additional uses of funds if relevant.
In the current mortgage market, it’s important to consider the benefits of fixed and fully-amortizing products for your commercial borrowers. These mortgages will give them more security and control over their finances, and they won’t have a large balloon payment hanging over their heads.