Wealth Opportunities in Commercial Real Estate: Management, Financing, and Marketing of Investment Properties

The Mortgage Loan Application

When applying for a mortgage loan, it is the application stage that is most crucial. It is at this stage that the transaction is usually cemented. Most major lenders' applications, when countersigned at loan approval, become the loan commitment. This is not to say that a lender cannot change the loan terms concurrent with approval, but the lender's and borrower's objective is to obtain loan approval “as applied for.” The point is that it is at the loan application stage that the underwriting is performed, and if the financial analysis is supported by the property operations then, theoretically, assuming the loan officer understands his company's underwriting guidelines, the loan should be approved as submitted. It is therefore important to obtain a copy of the loan officer's underwriting analysis, if possible, so you can verify that his assumptions correspond with the property's actual performance. If, when you review the trailing 12-month performance, the underwriting analysis matches the actual property's performance, the lender will be hard-pressed to modify the terms of the loan at a later stage.