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What Interest Rates Do You Get on a Mortgage From a Commercial Mortgage Broker?

Some people prefer to shop around for their own commercial mortgage, often looking at lenders that they trust with a good rating and applying to see what loan terms they offer. But others like to go through a commercial mortgage broker, because commercial lending is much more complex than traditional mortgages and comparing and contrasting the best rates possible is difficult on your own.

In some cases, you can also get a better deal on a mortgage when you go through a broker because the broker will pass some of the fees and savings onto the lenders. But of course, fees are not the only part of a loan. You’ll also want to find out the interest rate of a mortgage from a commercial mortgage broker.

Interest Rates From a Mortgage Commercial Loan Brokers?

In most ways, the interest rates you receive from a broker are or should be nearly identical to the interest rates that you receive from retail. In some cases they may be better, because brokers are often able to shop around and find the best rates available, thus allowing them to pass those savings along to you.

Interest rates are still very dependent on the type of loan, LTV, terms, and your credit history, starting almost exclusively at a 4% APR (except for FHA loans, which may start at 3.25%) and going up from there. In some cases you can get a better deal because brokers are able to structure loans in a way that are advantageous to your payment needs, so your effective interest rate is may be lower as well.

But working with a broker doesn’t necessarily mean that the interest rate on the mortgage will be lower either. You’ll want to pay attention to the following term: YSP, or “Yield Spread Premium.”

What is the Yield Spread Premium?

YSP is a term for a payment that lenders make to mortgage brokers in exchange for “selling” a borrower on a higher interest rate than the rate they would offer through retail. In other words, if the mortgage broker is able to “get you to pay more” than you otherwise need to on your APR, then they are provided with a YSP as a reward.

However, by law mortgage brokers are required to disclose any YSP’s, and while the idea that you are paying more for your APR may make you feel like your broker is trying to cheat you, the reality is that some borrowers are happy to cover YSPs because they are often offered in exchanged for no origination costs – meaning you pay less or nothing up front for your loan, and make up for it with a slightly higher interest rate. The fees are then paid by the lender instead of by you.

Still, YSP or not, in most cases the interest rate you get on your mortgage from your commercial mortgage broker will be roughly the same as the rate you would receive directly. The only difference is that you put in much less work.

If you’re interested in learning more about these types of lending options, sign up with CRE Lender today. We’re confident that we’ll be able to connect you to those that will close on your loan. Contact us today to find out more.

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