Having a reliable partner for your commercial mortgage business in 2020 sounds like a breath of fresh air, right?
As we near the end of a chaotic year, there are still unknowns across many industries. Luckily, mortgage pros who work in the small-balance commercial space can now breathe easier because Silver Hill Funding, LLC is back with all new offerings that provide brokers and their clients more options for their commercial scenarios.
But first things first: familiarize yourself with our commercial loan program to successfully close deals with us. There are a few changes you need to consider before submitting a loan.
Silver Hill Revamped
It’s no secret – the small-balance commercial mortgage industry has undergone a major shift in the last year. But with Silver Hill back in the market, you now have more reason to feel confident as you work to close deals between $100k and $2 million.
Here’s a quick look at the general highlights for each program:
Commercial Loan Program
|Terms||5-year ARM/30-year Fixed|
|Amortization||15, 25, 30|
|Max LTV||<$500K: 75%
|Min DSCR||Owner-occupied: 1.2
|Stabilization||75% occupancy required over a 90-day trailing UW period|
|UW Method||Owner-occupied: Global DSCR
Investor: Property DSCR
|Documentation||2 years personal and business tax returns|
|Pre-payment Penalty||5 % for 5 years/ 5% for 3 years/ Declining 5%, 4%, 3%, 2%, 1%|
With heightened risk in the small-balance commercial mortgage market, our team of experts took measures and transformed our offerings to better serve you and your clients in today’s market.
However, there are a few changes you need to consider before submitting a loan request. Mastering these pointers will help you and the borrower get a quicker and smoother closing.
Tip #1: Reserves, Reserves, Reserves
When submitting a loan request to Silver Hill, your client must be prepared to show at least 6 months’ worth of reserves on bank statements, including Principal and Interest payments. This goes for all loans: purchase, cash-out, and refinance.
It’s important the borrower provide this information to demonstrate their ability to make their monthly payments.
Tip #2: Note Borrower Characteristics
One key factor to note for a successful loan submission is knowing which of your clients is a good fit for the lender. Our solutions work for a wide range of borrowers, including:
- Borrowers who have been turned down by banks
Borrowers may not meet the criteria required by a traditional bank, but that doesn’t mean they can’t qualify for a commercial loan. In fact, small business owners and investors can choose an alternative route and get more flexibility and terms that more closely align with their specific needs.
- Borrowers wishing to refinance out of higher-rate, shorter-term bridge financing
Small business owners who are ready to move on from their commercial bridge loans (and high monthly payments) can secure a long-term solution with lower monthly payments by refinancing their loans.
Refinancing with a traditional bank is not always an option for certain borrowers. In these cases, they can opt for an alternative lender and still get a long-term solution with flexible terms.
- Borrowers with maturing loans
As a commercial mortgage pro, your clients may look to you for solutions to avoid the dreaded balloon payment at the end of a loan term.
Seeing as balloon payments are typical with commercial loans, many of your clients will probably want to refinance their loans and avoid paying a lump sum.
- Borrowers looking to cash out equity from their existing commercial properties for working capital or other business purposes
Opting for a cash-out refinance is common among small business owners and investors who have a commercial mortgage. They may want to tap into the equity they’ve acquired over time for various reasons. Whether it’s for a new business venture or to purchase another property, having access to these funds is crucial for some borrowers.
Although many traditional lenders don’t offer cash-outs, your clients can access these funds if they partner with Silver Hill.
Tip #3: Remember Property Types
Silver Hill lends on a wide range of commercial real estate, including: multi-family, mixed-use, warehouse/self-storage, light industrial, office, automotive, and mobile home park properties.
Having a good understanding of Silver Hill’s eligible property types can help you quickly qualify and disqualify scenarios. To make life easier, here is a list of ineligible properties we often see in deal submissions.
- Assisted living
- Car Wash
- Cooperative Ownership
- Gun Shop
- Adult entertainment
- New construction
- Leasehold Mortgage
- Single rooming house
- Special use properties like marinas, ice skating rinks, golf courses, etc.
Tip #4: Focus on Debt-Service Coverage Ratio
The debt-service coverage ratio gives us a glimpse into the borrower’s ability to pay current debt obligations. It essentially shows whether a business has enough income to pay its debts and handle a mortgage payment.
Lenders are focusing on the DSCR now more than ever because it’s crucial to see how the borrower’s business fared during difficult economic periods.
Silver Hill’s DSCR requirements vary depending on the borrower’s loan purpose (purchase, cash-out, r/t refinance) and FICO score, so be sure to ask your Regional Manager for more information when discussing your deals.
Ready to take the next step with Silver Hill Funding?
Reach out to your Regional Manager today – they can guide you through our processes and give you more in-depth details on your specific scenarios.
If you think you’ve got a deal that fits our guidelines, reach out to us now and someone from our team will get back to you shortly.