Owner Occupied Commercial Mortgage

Loan to values, as in the difference between what a property is worth vs. what is owed, is another key ratio to reduce risk for banks.  The normal high side for the typical owner occupied property, such as office, industrial or retail, is 75%/80% on a refinance.   This is being dropped pretty much across the board to a max of 70%.   Special purpose properties, such as, restaurants, automotive, hotels, daycares, etc are taking the brunt of it, as many lenders will not lend beyond 60% loan to value.  Many lender have simple stopped lending on these properties all together.

CREDIT

Personal credit scores are becoming an all too easy way for banks to quickly and efficiently say NO to a deal.   680 is now the new 640.  It’s not to say that there are no decent lenders that will look at deals below 680 but the file has to have strength on it to augment the weaker credit score.

GLOBAL

The Global Income ratio effectively computes all income (both business and personal) vs. all expenses (again, both business and personal) that the entrepreneur has.  50% to 60% has been the norm for years, now more and more lenders are demanding 40%.

Beyond the underwriting rules that are becoming more strict, there’s seems to be a general confusion among banks as to what actually fits their criteria, and or a “wait to see what happens” mentality.  This can be especially frustrating for business owners as most would prefer a quick yes or a no, rather than being dragged out due to confusion.