Keep Your Loan From Going to the Bottom of the Pile, or Worse

In the last chapter we discussed how to negotiate between two or more lenders for a more favorable letter of interest. Then you decided by carefully analyzing all of the pros and cons of each loan quote, which lender had the best rate and terms for you. Congratulations! You’ve come a long way.

Go ahead and sign the loan application and write the lender a check for the application deposit. But your only half way to the finish line: the loan needs to close in a timely fashion and with the rate and terms shown on the letter of interest. In other words, it’s one thing to get the loan application that you wanted, now you’ve got to get it closed in a timely fashion.

I have two very important tips that will significantly improve your chances of that happening. First of all, do not dribble the loan documentation to the lender. Once you have chosen your lender, one of the most important tips I can give you is to make the loan process as easy as possible for the lender. Complete the lender’s forms quickly, thoroughly and accurately.

Most lender forms are, at best, poorly worded and many times, just plain inane. Accept that as being true and fill in every box on the form to the best of your ability, no matter how silly or irrelevant. Your goal should be to complete all of the lender forms within the first two weeks of signing the loan application. You want everything thoroughly completed well before the appraisal is completed so that you don’t cause a delay in the underwriting process.

A borrower who is unwilling to focus on getting the forms to the lender in a timely manner is putting his loan at risk by increasing the chances that the underwriter will cool to doing his loan. At best your loan closing will be unnecessarily delayed. If they don’t have your documentation by the time the appraisal comes in, your deal will go directly to the bottom of the pile. At worst, depending on the length of the delay it could kill your loan. I’m not exaggerating. The saying, “Strike when the iron is hot,” applies to commercial lending. When the lender is emotionally in favor of your deal, make sure he has everything he needs so he can get you a quick approval.

The second thing you need to in order to get the loan closed in a timely manner is to not violate the “golden rule” of lending, which is, “He who has the gold makes the rules.” Each lender has its own unique way of underwriting, processing and closing loans. Don’t get into an argument about their process. To do so is futile as you will not win. All it’s going to do is to create bad feelings and that is not what you want to do with those who have the ability to approve or decline your loan. Provide them with what they are asking for, in the manner they have requested it, and you’ll be better off in the end.

The next two chapters will describe four reasons for using a commercial mortgage broker.