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Why use a mortgage broker?

A top quality mortgage broker can help you navigate through the ever-changing mortgage market and help you to identify and target the best opportunities. Tapping into this market experience and overview can easily save you much more than the broker’s fee. As a result of being “in the trenches” every single day, a good broker is at the cutting edge of what is being offered, of how far the envelope can be pushed, as well as the specific language beneficial to the borrower that has been successfully negotiated on other transactions.

The key to choosing a broker is the same as for choosing any other professional. Word-of-mouth references, as well as due-diligence on the broker’s background, experience and reputation are important. Of course, it’s critical that the broker you choose is deeply engaged in the current mortgage marketplace, is a good communicator and a skilled negotiator.

Utilizing a good mortgage broker allows you to tap in to a high level of expertise and experience that can help you to best achieve your goals

Time ’til Close?

Assuming that the Borrower has made a decision to proceed and has delivered all the key documents needed to underwrite the loan to the broker, 45-60 days would be the typical range.

All key players from the borrower, the mortgage broker, the borrower’s attorney, the title company, to the bankers, the bank’s attorneys, the appraiser, engineer and environmental consultant need to be kept in forward motion because if there is any hiccup the whole schedule can delay the closing date.

Does my loan cost more than financing with a bank?

Duquesne Commercial Funding charges a placement fee of one percent of the loan amount. Banks also typically charge a loan fee of one percent or add an equivalent discounted value into the spread. Because DCF absorbs the cost of originating loans for the lender, we are able to negotiate direct pricing with most lending sources. As a result, borrowers typically incur no additional costs by engaging us to negotiate and manage their transaction.

In addition, DCF saves its clients time and money by creating an environment that forces the market to compete for the borrower’s business. Ultimately, clients get all the cost benefits of a more effectively managed transaction without having to accept exorbitant spreads or large loan fees.

What is a yield-maintenance prepayment penalty and how is it calculated?

Yield Maintenance is a prepayment penalty that, in the event the borrower pays off a loan before maturity, allows the lender to attain the same yield as if the borrower had made all scheduled mortgage payments until maturity. Yield maintenance premiums are designed to make lenders indifferent to an early prepayment by a borrower. On the flip side, it can mean that if a borrower currently has a 6.5% rate on its mortgage with 5 or 6 years to go until maturity, at this time the penalty could well be huge.

For example, let’s assume a 15-year interest-only $1,000,000 mortgage at 4%. After the 5th year the borrower decides to refinance. The yield maintenance prepayment penalty would equal the difference between the current 4% rate and the yield that the bank would receive reinvesting the loan proceeds in a 10-year Treasury Note. (10 years being the remaining term of the loan).

To keep this example simple, let’s say that at the time of prepayment, the 10-year Treasury note rate is 5%. The borrower would be required to pay the lender the present value of the 2% difference for each year over the loan’s ten remaining years, or $200,000. This penalty will make the lender “whole” and insure that the lender will not experience an economic loss as a result of being paid prior to the loan’s maturity. This same formula applies to amortizing loans, however it is much easier to illustrate with an interest-only loan.

Each lender will have a slight variation to this formula, however the above example conveys the spirit of the yield maintenance penalty.

My bank turned me down recently, can you help?

Yes, we do loans for many commercial property owners who were previously turned down from their bank for a variety of reasons. We understand your unique needs. DCF takes a “common sense” approach to approving your request. We are helping business owners like you every day who have been turned down by their bank.

What are my up front costs?

There is absolutely no up front cost. After we have approved your loan and you have a binding commitment letter in your hands. If we can’t offer a commitment letter there is no cost to you.

What do you need from me?

Contact us using our contact page to get started. It’s quick and easy.

What are the 5 C’s We Use To Assist Us In Making Lending Decisions?

Personal references, business experience and work history can sometimes substitute, but a strong personal credit history proves that you have the willingness and the discipline to repay past debts — and future obligations.

DCF uses a credit-reporting agency to look at your payment history with trade suppliers and other business obligations. We also look to see that your payments to other financial institutions are current.

Cash Flow
A company’s cash flow is its net profit, plus its non-cash expenses — depreciation and amortization. Our rule of thumb is that for every $1 in total loan payments, your business must generate $1.20 in cash flow.

DCF wants to know how you would be able to repay your loan in case there was a sudden downturn in your business. Your ability to do this could include real estate holdings, certificates of deposit, stocks and other sources of savings that can be liquidated quickly.

With a secured loan, you pledge something that you own as collateral. It might be personal assets like certificates of deposits or stocks, or business assets like real estate, inventory, equipment or accounts receivable.