How to make your commercial mortgage closing go more smoothly:

Don't paint yourself into a corner:

With regard to the structure of the loan, at the outset, consider all the different ways your project may play out and plan appropriately. For example, if there is a chance that you will convert your newly acquired multifamily or mixed-use property to condominiums sometime down the road, you will want to be 100% sure that your lender will agree to having their loan repaid as units are sold (and as their collateral is whittled away). A long-term fixed rate might be a terrific play given today's interest rates, but not if you might convert your new project to condominiums and may therefore need to prepay your mortgage incrementally.

Similarly, if there's a good chance that you might sell the property within a few years of your closing, plan carefully about your prepayment penalty and/or your new lender's willingness to permit a buyer to assume the mortgage.

To sum up: There are enough things that can go wrong and/or cause delays. In order to achieve a smooth closing, use any slack time to move as many of the obvious tasks from the "to do" column to the "completed" column sooner, rather than later. When crunch time comes just before the closing, you'll want to be concentrating on any important loose ends in the mortgage documents, rather than being distracted by the trivia and "white noise" of routine tasks that should have been completed weeks earlier.

© 2008. Gregg Winter. All Rights Reserved.
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By Gregg Winter, Managing Member