We guess lighting does strike twice!! Since the beginning of the year, interest rates have made a dramatic U-Turn…The pundits were talking about rates going thru the roof, but the herd mentality was wrong! The 10 year Treasury note has declined from 3.25% in January all the way down to piercing the 2% level….
How does this translate… it means it’s time to reanalyze one’s current mortgage interest rate and review alternatives that may be available such as, lowering the monthly payment or perhaps shorten the amortization period to pay off the loan in a shorter timeframe. Naturally, we have many products available to customize. In some instances, cash out refi’s make excellent sense to pay off prime based home equity lines of credit (prime is now 5.5%) and many are adjusting to higher payments based on term.
The math for residential loans is so appealing that many clients are taking the opportunity to pay off business loans, student loans, potential upgrade costs, consumer debt etc. This repositioning of debt usually makes good economic sense.
We also are doing a large volume of cash out refi’s to pull cash out of existing properties and using this cash out as part or all of a down payment for an Investment type property or second home. The Apartment and Commercial property markets are extremely aggressive and the overall acquisition concept is the appreciation potential with these Investments. This is an alternative to review instead of letting equity accumulate in a property and not producing any cash flow– this cash out concept is not for everyone of course but our grandparent’s mantra of a free and clear house is undergoing many manifestations in the real world of today– caution still prevails.
In addition to the conventional suite of loan products, we are now excited to offer a wide range of bank statement programs and asset based lending options. Albeit, these rates are typically 2-2.5% higher than conventional rates, many of our self- employed clients have utilized this excellent avenue for both primary and investment property loans. Finally, one of our institutional lenders has rolled out a very aggressive reverse mortgage program that does not have a dollar amount limitation, which previously was a major constraint. As most of us know, these various products are wonderful alternative solutions for clients who for a multitude of reasons don’t quite fit into conventional Underwriting Guidelines. These programs are as close as it gets to the old fashioned stated income programs that many of us fondly remember.
The real estate market remains quite strong with pockets of slight softness. On the whole, demand remains stable for all types and classes of real estate. We are extremely broad based and are experts with Construction and Commercial financing under $10 M, SBA, Small lot subdivision and 1031’s at all levels and cross collateralizing. There is tremendous liquidity literally chasing almost any type of real estate — as they say there is a market for any piece of dirt.
As always, we are available to discuss your personal or client financing needs. Have a happy and safe 4th of July holiday!! We welcome your contact — stay tuned!
Gloria Shulman and Curtis Cohen