Dedham Savings offers the reliable Banking and Investment Services in Massachusetts.

1. What You Need To Know About Commercial Real Estate Loan Approval
In order to get approved for a commercial real estate loan, you need to fulfill a host of requirements.
Just like in the case of residential property, you may need to take out a mortgage loan when you are
looking to invest in commercial real estate. However, the factors affecting the approval of commercial
real estate loans are quite different from personal mortgages. In fact, they are a lot more tricky and
demanding. Lenders look at various factors when considering approval, including property appraisals,
credit checks, down payments and your debt service coverage ratio before approving any loan.
Property Appraisals
Property appraisals are an important part of the approval process for commercial real estate loans MA.
These appraisals are carried out in order to determine the market value and cost of the commercial
property in question. In the case of commercial loans MA, these appraisals ensure that lenders don’t
end up loaning more than necessary. This also helps lenders avoid losses in the lending process. The
value of any commercial property depends on numerous factors such as size, accessibility, location,
condition of the plumbing, the roof’s condition and more.
Credit Record
Another important factor that is taken into consideration for approval of commercial real estate loans
MA is your credit record. A good credit record is vital for getting approval for commercial loans in
Massachusetts. However, the requirements for credit records are much more stringent in the case of
commercial property when compared to residential property. Apart from checking your credit score and
history, lenders also prefer that borrowers have comprehensive asset documentation and a solid income
to ensure that they will be able to make the loan payments. Similarly, lenders may also ask for proof
that your future business will be profitable.

2. Down Payments
Residential real estate loan seekers can get away with smaller down payments; however, this is not the
case for commercial loan seekers. Because the price tags on commercial property are much higher,
lenders are often more cautious when approving commercial loans. Large down payments are therefore
absolutely necessary to ensure the approval of these loans. Most lenders expect at least 20% of the loan
amount to be put down as down payment. That being said, some may also expect 30% or even 40%.
Debt Service Coverage Ratio
The debt service coverage ratio refers to the ratio of money generated by the property in the form of
rents and other types of fees or net cash flow against the monthly mortgage payment amount or the
debt service. This gives lenders a clear idea of how much you should pay for your commercial property
loan on a monthly basis.
For more information about Commercial real estate loans MA visit at
http://www.dedhamsavings.com