Tired of Refinancing every 5 years? How about once in 35 years?

Howell Investment Finance • March 9, 2021

Mortgages on investment properties typically have to be refinanced every five years, however, refinancing your multifamily or mixed-use property with HUD financing could possibly allow you to never refinance your property again. The reason is HUD mortgages come with a 35-year term plus a 35-year amortization. Just imagine the additional cash flow a HUD refinance will give to you on all of your properties.

What Are The Benefits of a HUD Mortgage?

Like we mentioned earlier, HUD mortgages come with the 35-year term and 35-year amortization. Here are some other benefits: 

  • HUD mortgages are non-recourse, no global finances needed.
  • HUD mortgages are assumable, could be valuable when you want to sell with the rising interest rates right now.
  • HUD will not require deposit accounts, so you can keep those with your current Bank.
  • Refinancing with a HUD mortgage will open up your lending limit with your current Bank, which could allow you the possibility of purchasing an additional property to your portfolio.

Working With Banks

Howell Investment Finance has worked with many banks to assist their Sponsors around Iowa to refinance their multifamily and mixed-use properties with HUD financing. On one occasion, a local banker called Howell Investment Finance to inquire about a HUD mortgage for one of their bank clients, saying they felt the client might be better served with the longer 35 year amortization that HUD offers. The banker put the Sponsor in touch with Howell Investment Finance, and they were able to refinance the Sponsor's property. That HUD financing allowed the Sponsor to increase their cash flow while not needing to refinance every five years. It also opened up the Sponsor's lending limit with their bank which allowed them to borrow money at their bank for another new project. This also gave the bank the ability to have the deposit accounts from two projects instead of just one. A true win-win situation.

Call Before The Interest Rates go Higher.

With the 10-year Treasuries rising quickly since earlier this year, the time to call is now. Fannie Mae and Freddie Mac follow the 10-year Treasuries very closely, however, HUD doesn't follow the 10-year Treasuries as closely, therefore HUD mortgages haven't been rising as fast and are still sub 3%. Keep in mind, these rates can and do change without notice, call a Commercial Mortgage Broker that has HUD mortgage experience and can guide you through the process. Call Howell Investment Finance now rather than later.

 

If you’re buying a multifamily building or other investment property in Ames, Cedar Rapids, Iowa City, Quad Cities, or West Des Moines, IA, Howell Investment Finance will help find the ideal financing option for your needs. They specialize in commercial and investment funding, financing multifamily and senior housing facilities. Visit their website to learn more advice and how they can help you purchase or refinance an investment property, or call (515) 233-8228.