How Small Balance Commercial Mortgages Are A Big Deal For Mortgage Brokers


Mortgage brokers throughout the country are taking a second glance at small balance commercial mortgages, and for good reason. Sub-$5 million commercial loan originations reached a record amount in 2015, and the market persists to expand as more brokers found the massive impact these small loans can have on their business.

Several different kinds of mortgage originators are finding success in the small-balance sphere, from domestic brokers looking to expand their new business with a new offering to seasoned commercial pros who simply wish to capture a larger part of the marketplace and eventually close more deals. What all have in common is a want to develop their business & meet the requirements of a previously underserved group of borrowers.

Listed here are a few reasons why now is the time start thinking small balance.

There’s demand in the market:

Stated income and asset loans are available for small balance commercial loans including for multi family that might have a low occupancy rate that would exclude them from traditional bank financing.

According to a recent report, sales of small-balance commercial properties totaled $22.8 billion in the first three months of 2017, surpassing last year’s record first quarter volume.  Usually borrowers range from business owners looking to buy their small office building to investors refinancing their multifamily property following a recent renovation.

Still, most of these borrowers find it hard to secure financing on their own, either due to the small loan amount requested or a blemish on their personal or business history.  This is where mortgage brokers prove their value.  Their expertise & industry connections are making the difference for credit-worthy borrowers all over the country, particularly for those who may consider themselves to be “un-bankable.”

Diversification is smart:

Put simply, the mortgage industry is an unstable place.  Since no one can forecast with total accuracy what direction the market will take, originators must plan for times of insecurity.  Diversifying an existing commercial or residential business with small balance commercial mortgages is a wise strategy because there’s a near-constant need for financing regardless of how the rest of the market is performing.

The deals are not too complicated:

Not like large scale commercial mortgages, which may take several months to close, small balance commercial transactions usually close inside 30-45 days. The shorter process length is probably one reason why domestic originators are drawn to sub-$5 million commercial deals.

No commercial mortgage is without its complications, but brokers can anticipate fewer headaches when they take on smaller deals.
Contact Commercial Loans Of Texas if you are lookingfor a reliable small balance commercial mortgage lender in Texas.

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