ASSET SPOTLIGHT

2022: The Year of the Refinance

Terrydale Capital

19 January, 2022 · 5 min read

Why Should You Consider Refinancing Your Commercial Real Estate Now?

There has never been a better time to refinance your commercial property mortgage than now.  The real estate market is booming, and the economy is on an upswing. The Federal Reserve Board’s decision last week to raise interest rates for the first time in nearly a decade should make it easier for you to get financing for your next project.

The Fed’s decision will likely increase long-term interest rates, which could be good news for borrowers looking to take advantage of low short-term rates. But besides the federal reserve projections, other reasons to consider refinancing now include the steady increase in treasury yields, the popularity of cash-out refinances, and the opportunity to increase monthly cash flow, thanks to debt restructuring. Let’s take a deeper dive into each of these four points and see why refinancing now is an excellent decision. 

  • Federal Reserve Projections

According to the New York Post and a host of other credible sources, the Federal Reserve officials have indicated that they project the rates to hike up to four times in 2022. Presently, the federal reserve interest rate stands at 0 to 0.25 percent and is expected to rise to the highs of 1.5% soon. That means that if you were to refinance your commercial property mortgage today, you’d lock in lower interest rates on your current loans.

You’ll save money! The average savings per $100,000 is around $2,500 annually. This can add up to tens of thousands of dollars over time. These figures don’t include any tax benefits or other perks associated with refinancing. At Terrydale Capital, our experts work around the clock to monitor the federal reserve trends, ensuring that we provide you with the best possible deal. We’re here to help you find the lowest possible interest rate and save you money.

  • U.S. Treasury Trends

Have you noticed? Treasuries have been increasing steadily since the end of 2021, and the trend doesn’t seem to slow down in 2022. But what does this mean? When the treasury yield increases, the interest rates also increase. That’s because the federal government must pay higher rates to attract more investors in future treasury actions. 

But as an investor looking to refinance their commercial property mortgage, you don’t have to wait until the interest rate skyrockets, as it will. Instead, you should act now to secure the best rates possible. And by doing so, you’ll enjoy lower interest rates with long-term financing of up to 30 years amortization. Not sure where to start? Don’t worry, as our team of real estate experts is here to guide you through every step of the process, bearing in mind the ever-increasing treasury yields.

  • Pull Cash Out 

Cash-out refinances continue to be a popular option for investors with equity in their assets who want to increase liquidity. As the name suggests, cash-out refinances allow you to pull cash out of your investment without having to sell your asset. That is, you can borrow more money than you owe on the commercial property, such that the difference (between what you owe on the property and what you’re borrowing) is what’s given to you as funds.

You’re free to use these funds as you please, and many clients choose to make improvements to their property, enabling them to increase the resale value or charge higher rent. However, certain restrictions apply to cash-out refinances. We’d suggest reaching out to your CPA to discuss other advantages such as drawing non-taxable income from your equity.

  • Restructure Debt to Increase Monthly Cash Flow

Every goal-focused investor wants to increase their monthly cash flow, wouldn’t you agree? By refinancing your commercial property mortgage, you can do just that while enjoying the lowest interest rates available. You may even be able to reduce your monthly payments, depending on how much equity you have in your property. In fact, according to some experts, refinancing can cut your monthly payment by as much as 20%, increasing your monthly cash flow. 

Many investors aren’t aware of these types of benefits, and they end up paying more interest over time. But we’re here to bridge that gap; our experts take a personalized approach to ensuring that all our clients understand the debt restructuring model and optimize it for increased cash flow.  

Tips for Refinancing Your Commercial Property Loans Successfully

  • Understand Your Options

In today’s market, there are a myriad of options and structures-for example, some offers can extend amortization and fixed terms, or provide less exposure from a recourse perspective. In addition to that, geography-specific lenders can provide competitive options that many investors will not be aware of without in-depth market knowledge and communications with lenders in many of these markets.  When diving into these different avenues to create the best structure, it is best to prioritize what works best for you and your financial goals.

So, before reaching out to a lender to obtain the best possible terms, having these prioritized will allow you to request the most optimal terms for your strategy. Understanding these options will allow you to save time when sourcing your deal. Each lending institution has different products that provide varying structures for each asset. At Terrydale Capital, we have over 3,000 sources and will help provide the best possible deal structure for your situation. 

  • Find the Right Lender

Once you’ve determined the type of loan you’d like to pursue, you need to find the best lender for your needs. This will require extensive back and forth with lending institutions and possibly talking to friends and peers who have used a particular company before. Once you determine the best option, be sure to ask about any pre-qualification requirements. Be aware of who you are speaking with at these lending institutions. Many of these lenders can provide terms without seeking necessary approvals or may not have the experience needed to close your deal. These lenders can vary widely depending on the type of loan you’re seeking. At Terrydale Capital, we have close relationships with the nation’s top banks, lenders & family offices, allowing us to provide the most competitive financing solutions in the market.

  • Know What You Need

The next step is determining what you need to qualify for your new loan. To do this, you must complete an application form and submit supporting documentation such as bank statements, tax returns, credit reports, appraisals, and so on. Be sure to keep track of any documents submitted to ensure that you don’t forget anything important. But before anything else, be sure to check out these loan programs to determine which one suits you best. 

  • Follow Up

After submitting your application, it’s essential to follow up regularly. Be sure to check your email inbox or voicemail messages periodically to ensure your application has been received. Also, call the lender occasionally to inquire about the status of your application. By working with Terrydale Capital, we bridge this gap and stay in constant communication with all parties, ensuring a smooth closing process.

  • Pay Attention to Details

Finally, you should always review your loan agreement carefully before signing it. Read through the entire document to make sure there aren’t any surprises. For example, if you didn’t realize that you needed to pay off all outstanding balances on your old loan before applying for your new one, then you could end up paying more money than expected. If you spot something unusual, contact your lender immediately to discuss the issue. Better yet, you can reach out to Terrydale’s Advisory and Consultation department for an instant solution. 

Lock in Lower Rates By Refinancing Today!

Have you been looking for a client-centric commercial real estate financing firm that understands your investment needs and goals? If so, Terrydale Capital has got you covered.  We’re an industry leader in commercial property financing, commanding close relationships with the nation’s top banks, lenders, and family offices. 

Together with our rich reputation, these strategic networks enable us to provide our clients with the most competitive financing solutions, from finding suitable commercial properties to securing the best mortgage terms. So whenever you’re ready for the most competitive financing structure in the market for your commercial real estate deal, don’t hesitate to reach out to Terrydale Capital. We are seeing rates as low as 3.25% with long-term financing available with 25-30 year amortization schedules.

Now it’s all your call; get a quote today, and mention this blog to find out how we can save you up to $25K on your next Refinanace.

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