What Can Ruin Commercial Mortgage Loan Application

L ike any other type of loan, a lender may reject your commercial mortgage loan application. This often happens when you as the borrower, do not meet certain requirements as set by the lender. It is important that before you submit your loan application, you iron out any factors that may affect your application negatively. In case your application gets rejected by the lender, you are left with costly options that offer higher interest rates, which you may not be able to afford. The following factors are what should watch for, when applying for a commercial mortgage loan. Credit: credit score is important in any type of loan. Without a good credit score, your application has higher chances of rejection. It is therefore important that you review your score before you submit your application. This gives you time to fix any problems on your credit report. For example, ensure you pay all your credit balances before you send in your application for commercial mortgage loan. Generally, this accounts for at least 30% of your score. In addition to improving your credit score, it is advisable to reduce your debt-to-limit ratio to a bare minimum, by paying for every item on time. Avoid opening new credit, as this can affect your loan application negatively. In the end, you need a score of about 720, to qualify for mortgage. Proof of security: commercial mortgage loan is secured by an asset, which must belong to you at the time of application. Besides, you should also have stable source of income as a proof that you are able to repay the loan. Security is important, especially for the lender, in case you fail to repay the loan as agreed. In conventional loan, the lender needs proof of employment to verify whether you can repay the loan. However, in commercial loans, a business property serves as a better security for the loan. When applying for commercial loan, it is important to put these factors into consideration. Once you fix everything, you are likely to have a smooth ride with your loan processing.