Has anyone used a Commercial Loan to finance a property?

[Tawny Bloom]

We have a property we are looking to buy but traditional residential loans will not be an option as my husband is self employed and they will not consider his income.  We are exploring the idea of doing a commercial loan but I am curious if anyone has any feedback as to advantages and disadvantages of going this route.  The loan would have a max term of 20 years.  We would have the option of doing either a fixed rate for 5 years (approx 4.25%) that then resets or a floating rates based on prime.  Thoughts?

[Ray Arends]

Hi Tawny,

I just went through the commercial loan process for the first time. The lender wanted two years personal tax returns, three years of tax returns from a partnership I was involved with as well as a PFS, a personal financial statement. The PFS was basically a list of assets and liabilities.

The numbers on the property I financed spoke for themselves. Good credit and a healthy PFS plus a 25 percent downpayment probably didn't hinder the process either. I went through a local bank that I had established a relationship with when I refied my primary residence.

The anxiety I experienced through the process was entirely my fault - it wasn't that big a deal. Exercise or develop a relationship with a local bank, and if they say no find out why and move on to the next one.

Best of luck!