With the new year starting, now is the time to check all of your investment properties maturity dates to see when the loans need to be refinanced. With interest rates still at all time lows, it is best to see when your loans are due and not get caught off guard and surprised. Depending on the loan type you are wanting, extra time planning will pay off in very good rewards for you. 

What You should be Looking For...

1. Check your loan’s maturity date.

Review your loan documents to see when you need to refinance and also look to see when your pre-payment penalty expires. Often the pre-pay is done the last six months of the loan term, some are even done 12 months prior to the end of the loan term. This can save you thousands or even hundreds of thousands of dollars and it is better for those dollars to be in your pocket than your current lender’s pocket. There are times when it is advisable to refinance at the current lower interest rates and pay off the pre-pay and lock in a great interest rate for 10 years and even longer. 

2. Check your interest rate.

May sound ridiculous, however, Howell Investment Finance has asked sponsors this question before and they have to check. Depending on the property type, there are more than one refinancing option available to you. Also, interest rates are different based on many factors, Loan-to-Value (LTV) can play a major difference. The lower LTV, the lower risk to the Lender and therefore a lower interest rate. We all know at some point in the future the interest rates will increase, so now is the time to start planning your refinancing.

3. What you need to gather.

Having your financial house in order will pay huge dividends. Howell Investment Finance has seen many types of financial recordkeeping over the years. In order to get the best terms and interest rates, plus a quick loan processing and approval, it is best to use a computer financial software program. Also, have the current Rent Roll, the Trailing Twelve Months financials (T-12), three years of financials on each property, and keep your Personal Financial Statement (PFS) updated. Having these available and updated in an Excel format will help to get you started.

4. What type of a loan do you apply for?

Many sponsors think their only option is to go to a local bank for financing on their investment properties. Depending on the type of investment property, you have various choices. For multifamily, you can finance with Fannie Mae, Freddie Mac, HUD (not just for low income but also for market rate units), and CMBS (conduit loans). For office, multifamily, hotels and retail properties, the CMBS is a very good option. These loans have 30 year amortizations, or more, to increase your cash flow, plus they are non-recourse loans.

5. Use an Experienced Commercial Mortgage Broker

Securing financing for your investment can be one of the most stressful, challenging aspects of financing investment properties. However, an experienced commercial mortgage broker with a track record of success will have the professional network and expertise to help you find a loan with the best terms available.

If you’re planning to refinance a multifamily building or other investment property, Howell Investment Finance of Ames, IA, will go above and beyond to get the financing you need. Since 1992, they’ve negotiated loans from $1 million to over $30 million, with over $100 million in total lending all over Iowa. Visit their website for an overview of the loan types they offer and call (515) 233-8228 to speak with Denny Howell today.