Professional audit systems are commonly used in today's commercial finance industry. Use an automated underwriting process to determine if a lender should fund a particular property or potential borrower. The underwriter enters the property and borrower into the accounting software system, which then analyzes all the information and determines whether the property and the borrower meet the requirements of the specific loan program.
With this type of system, loan approvals are broken down into foundations. The computer system looks at various factors to determine if they fit the right range. The standards for commercial funding vary widely. However, for the time being, we will only consider one of the factors - and vice versa, the non-recourse loan. If the loan program under consideration is non-recourse, the borrower [or borrowing entity] is not eligible for the loan and is not responsible for the loan, as the property itself must qualify. The qualification of the property is mainly based on income minus operating expenses or net operating income [NOI]. If the occupancy and rental income of the apartment building exceeds all maintenance and daily operating expenses and the remaining margin, the NOI is positive and may qualify for a non-recourse loan. In the event of a loan default, the lender will recover the property and the borrower will not be personally liable.
Other commercial loans are not without recourse. Even if the property achieves positive cash flow, the borrower must be qualified through his personal credit report, income, debt, assets, cash on hand, etc. The computer system will review these content based on these content to make a decision. Specific guidelines for a specific loan program.
Knowing that your commercial loan application is approved may be determined by a computer program, and submitting your application to the actual lender through a pre-programmed process can give you a strong advantage. You will have the opportunity to encounter any unforgettable things in your application and make important adjustments in advance.
Proper assembly of all documents will also bring advantages. When all the necessary information is organized and easily identifiable, it is much less likely to miss something while entering the underwriting system, or the problem remains unresolved.
Pre-underwriting and loan application packaging by experienced professionals can cost thousands of dollars, but since the difference between approval and rejection can be large, it is worthwhile to invest when you know you have a chance. A great commercial real estate deal.
Orignal From: Commercial loan underwriting approval process
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