Top 5 Things You Should Look for in a Church Mortgage Lender
In order to continue the mission of your church, you may be looking to find a larger space to accommodate the growth of your congregation. One of the first things to do in circumstances like these is to find a church mortgage lender.
However, the world of lending can be a confusing place. And when your congregation is trusting you to make the right choice, you don’t want to let them down.
There’s no need for worry, though, because as stated in Philippians 4:13, “I can do all this through him who gives me strength.”
In the following paragraphs and pages, we will break down the process of looking for a church mortgage lender and what to keep an eye out for so you can feel extra confident about choosing and using the correct lender for you.
Tip 1: Make Sure They’re an Experienced Church lender
Financing a Church or a building to hold a congregation is not the same as financing a house. There are different aspects that come to play and can determine if you will get approved for a mortgage. For example, unlike basing the decision on your personal income when pursuing a home loan, a church loan will focus on your church’s income, attendance of your church, length of time in operation, and other factors.
Churches are essentially treated like businesses and commercial transactions in the lending process, and the repayment looks vastly different from a home mortgage. Often it’s much shorter than the 30-year repayment period of a residential home. Repayment can be anywhere between 1 and 30 years from minimum to maximum.
Overall, churches may experience different financial and loan needs than a person looking to purchase a home. Therefore, it’s crucial that you look for an experienced church lender versus someone who solely focuses on residential or even generally commercial lending.
Tip 2: Ensure They Offer Permanent Financing
If you have never heard of permanent financing, don’t worry. Most haven’t, as it isn’t a term you usually hear regarding normal home mortgages. Rather, it is usually applicable to commercial real estate loans.
Permanent financing usually refers to loans used to refinance a building after a construction loan has been used to construct a property. The permanent loan pays off the construction loan. So if you are borrowing money to construct a building, it is a good idea to ensure that you have permanent financing in place when the construction is completed. Construction loans are short-term and usually 18 months or less, and your church does not want to face the risk of having to pay off a short-term construction loan without having the permanent loan in place. If you do not have the permanent loan in place, you run the risk of facing foreclosure if the lender calls the construction loan and you cannot pay it off.
Tip 3: They provide competitive and low-interest rates
The one aspect that is the same with commercial and residential loans is that you want to ensure that whichever lender you choose offers competitive and low-interest rates.
Since payments will be made using donations from your congregation and any proceeds you may earn from fundraisers, you want to ensure that there aren’t unnecessarily high-interest rates, especially when lower ones are available elsewhere.
You can expect interest rates to be between 4 and 6% for a conventional church loan, so if you’re able to find interest rates that are lower than that, make sure to find out the details of what all is involved.
If your church has an account with a bank, go to the bank, see what loan terms and interest rates they offer and call Griffin Capital Funding to compare.
Tip 4: They will approve you for what you need
There are many options when looking at church mortgage loans. Here are some things you may want to consider:
– Are you looking for a construction loan to build a new Church or renovate in your current location?
– Are you looking to buy an existing property?
– Are you in need of a bridge loan, line of credit, construction loan, refinance, purchase, or land loan?
It’s important you know exactly what you want and need and that whoever you choose to work with will also provide you with the necessary information and backing you require. A good sign that they’ll be able to approve you for what you need is if they regularly do loans like these (see Tip #1). If they close many church loans, they’re (usually) skilled enough to do them again.
Whatever you know you’d like to see happen; it’s going to be incredibly helpful to communicate that with the lender. If they don’t understand your vision, mission, and objectives, it’ll be difficult for the lender to address and deliver on those needs and wants.
One thing, for example, is timeliness. If the lender doesn’t understand your mission, they may not see the urgency needed to complete the loan. If your lender can approve you for what you need when you need it, you’re golden!
That brings us to our last piece of advice on tip #4: make sure to mention if there’s a time limit or desired timeline for the project and ask about the expected turnaround time – this is crucial to understand if they can approve you for what you need.
Tip 5: Above all, choose a lender you can get along with
This is a step that absolutely cannot be overlooked. You will be spending quite a bit of time discussing the future of your church with this lender. They will partner with you to help you on your mission to make a larger impact.
Whether they offer you the best rates in the world, character and personality fit will trump that any day of the week. If your interest is low, but the person you work with is unresponsive, terrible at communicating, doesn’t understand your vision, and takes their time to process your loan, it may be time to find a new officer. Their behavior doesn’t need to be ill-intended, but the responsibility of finding a good and fitting lender is a big one.
While it’s not necessary for the lender to also be religious, it’s important that he embraces and exemplifies upstanding values. Character traits like honesty, integrity, kindness, selflessness, and empathy will go a long way. The most important thing is that your lender is as excited as you to help you find the perfect home for your congregation.
Your lender should also be enthusiastic and on the same page as you to help you achieve this goal. It’s important that they care almost as much about making this vision of yours a reality as you do. And even more importantly, it’s important you like them. They should communicate well so that when challenges occur, you will be kept up to date in the process.
Challenges happen, and this is a very personal and important project – you’re going to have a much easier time bringing it to life if you do it with someone you enjoy working with.
First off, congratulations on leading your congregation to growth and a bigger home! That is a huge success in and of itself and shouldn’t be taken for granted. Whatever challenges may be thrown at you, know you will find your way through them with God’s guidance.
At the end of the day, it’s important to shop around, look for a lender who offers competitive and low rates; has the experience necessary to be an expert in the field; understands your vision, mission, and philosophy; represents and reflects at least some of your values; and finally, will help you give your Church the space allowing it to be all it can be.
At Griffin Church Loans, nothing matters more to us than getting your congregation into the space it needs. We offer competitive loans at exceptionally low rates, and, above all, we care about the welfare of your church.
We’d love to hear from you!