Differences between Residential & Commercial Mortgages

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Andrew Duncan talks to Jorge Gonzales from FBC Home Loans and Gene Snyder from Platinum Bank about the differences between qualifying for commercial loan vs residential loan.

When applying for residential loan, they will take a look at your credit, income and your assets. They want your debt to income ratios to be in line to afford the property. They will also have the appraisal come and make sure it meets Fannie Mae and Freddie Mac guidelines or for whatever program they need. Andrew adds the importance of Fannie Mae and Freddie Mac because the mortgages are being backed by them so they have to fit their box as oppose to the commercial side where there is no box to fit into.

In Commercial loans, there are a lot less boxes to check on the commercial side. In commercial lending bank, it is based more on the relationship with the borrower and not specific to any projects or any boxes to check.

Andrew talks about his first hand experience when Platinum bank financed his new office building*. He raves at how they did an awesome job for him with great competitive rates, etc.

It's a full credit underwriting that they do and not just a bunch of boxes to check. It has to do with all the financials, their history and experience. He shares that he writes 20 pages to get an approval where they tell the whole story which will get them through committee.

Andrew explains that the committee is basically a group of advisers or the board from Platinum Bank that sit down and discuss whether to approve the loan or not as oppose to the residential world where it's more of a computer or sometimes an underwriter looking at the application. Gene agrees and says that these are local decision makers who may know the business, the applicant and would be able to weigh the pro's and cons of approving the application.

For more Tampa Bay Real Estate news and advice, tune in to The Duncan Duo Real Estate Show on 970 WFLA - Tampa Bay every Sundays at 10 am.

*The Duncan Duo and RE/MAX Dynamic has moved. As of 10/11/2014, our new address is 6320 S Dale Mabry Hwy, Tampa, FL 33611