Apartment loan is coming due

Apartment refinance

My apartment Loan is Coming Due, and I don’t want to be trapped in a high-interest rate loan.

Here are conversations we are having with multifamily investors. “Our Fannie Mae or Freddie Mac apartment loan is maturing where should we go to refinance the apartment complex with interest rates high?”  For loans over seven million, you might consider a loan with a term and amortization of 35 years.  This loan product like Fannie Mae and Freddie Mac is considered a non-recourse loan. Another similarity to the Fannie Mae and Freddie Mac loans is that loans also come with prepayment penalties.

Unlike Freddie Mac or Fannie Mae, the borrower can recast the interest rate after the loan closes.  If the interest rates decline after the loan closes, you can recast the interest rate to the new lower rates for minimal out-of-pocket costs.  So, you avoid trapping yourself in a higher interest rate.

This nationwide loan product offers you two interest rate reduction options.

  • You can recast the loan interest rate to a lower rate when the market so dictates while maintaining the existing maturity date and remaining amortization of the existing loan. This can be completed with very little out-of-pocket cost in a relatively short period of time to complete.
  • Another Rate Reduction Option allows the borrower to extend the loan term up to 12 years to the original 35-year term.

This loan product does take many months to close, a longer process than a Fannie Mae or Freddie Mac loan.  Due to closing costs, it is best for loans to be at least $7 Million or greater. This loan product offers the unique option for the borrower to reset the interest rate multiple times should the market rate decrease during the loan’s life.

Want to learn more about this loan call today.

Mike Caffrey (913) 402-7077