Are you wanting to increase the cash flow on your multifamily property?The question comes up as to why investors should consider a Fannie Mae or Freddie Mac mortgage vs going to their local bank for securing their multifamily mortgages.

Iowa-based Howell Investment Finance will highlight the reasons why getting a mortgage through Fannie Mae or Freddie Mac can increase your properties cash flow:

Highlights of the Small Balance Loans through Fannie Mae and Freddie Mac ($1,000,000 – $5,000,000): 

• 30 year amortization
• 7,10,12+ year fixed rate
• Non-recourse
• Cash out is possible
• 1-3 years interest only
• Loans are assumable
• No tax returns, no global financing

With the Federal Reserve raising interest rates last week, plus announcing there may be three interest rate increases in 2017, now is the time to lock in an interest rate that is lower than it probably will be this time next year. Clients that have recently locked in a 10 year fixed rate through Howell Investment Finance won’t have to worry what their mortgage payment will be in a few years, they have already locked in their future cash flow. What will happen to your cash flow when you need to refinance your multifamily property in a few years and you realize the interest rates have significantly increased.

You’re thinking I have a pre-payment penalty, so I can’t refinance even if I wanted to. You may want to check with your banker. It may be a benefit to your banker to allow you to exit your loan with them earlier, if you refinance your multifamily through Howell Investment Finance with a Fannie Mae or Freddie Mac mortgage. The reason your banker could like this idea is by cashing out your bank, you open up your credit limit with the bank to purchase another property. The benefit to your banker is they keep your deposit accounts in their bank, plus you will be bringing additional operating account deposits to their bank with the purchase of your next multifamily property. 

There is value with the mortgage assumption. If you do decide to sell your multifamily property in the future, since your Fannie Mae or Freddie Mac mortgage is assumable your property will have a higher value than other multifamily properties.  The other multifamily properties will have to be purchased with the higher interest rates, where they can assume your mortgage at a lower interest rate. Buyers will want your property with the lower interest rate. More on that in future articles.

If you have further questions, let Howell Investment Finance assist you on the details of investment properties and multifamily mortgages. They help Iowans purchase all kinds of real estate, from senior housing and multifamily homes to commercial buildings. Call them at (515) 233-8228 or visit them online to learn more about different loan types.