Whether Residential or Commercial, Be Prepared
Q: When considering borrowing for the purchase of a home, or to expand/improve a business, what should I expect from a community bank vs. a large regional or national bank?
A: The one item that is common for all banks is our money; it is all the same. The biggest difference is local underwriting and decision making for all loans. A prospective borrower can feel confident that the local community bank’s loan decision makers – whether residential or commercial – are also local community members; therefore, a quick decision making process is a real bonus to our clients. It allows us to know and understand the local market and economics, which allows us the flexibility to customize our loans to our clients in the community.
Q: So, if I decide to work with a community bank, what information will I need to start the application process?
A: The collection of information is standard throughout the banking environment; typically that would be information of Assets, Debts and Income. Residential:
Assets: Copies of bank or brokerage statements for all savings, investment accounts, IRA, 401K, etc.
Debts: Balance and payment information on all loans, credit cards, student loans, etc
Income: Copies of recent paystubs, usually two pay periods, W-2 statements for the previous two years, and information on any other source of income, such as alimony, rental income, business income, etc.
Commercial: While the basic information of assets, debts and income is the same as residential lending, the information is usually more complex. I always take the time to meet with the client to discuss their loan request and then tailor our request for financial information to their situation.
Q: In residential lending there are standard terms, such as a 30-year fixed rate mortgage. Are there standard terms in commercial lending as well?
A: Yes, for the most part. A typical loan term for a commercial investment property would be a fixed rate, an initial term of five years with an amortization period of 20 to 25 years.
Q: What advice would you give to a first time borrower, for a residential or commercial loan?
A: Be prepared with the information discussed above. Don’t be afraid to ask questions. And, don’t be afraid to ask for advice from the bank’s loan officer, and/or other professionals. Finally, if you are not getting the service or attention you deserve, say something. I95
Chesapeake Bank of Maryland