Maximize Your HUD Loan to Pay Off Higher CRE Interest Rates

With the Federal Reserve talking about 2-3 interest rate hikes this year, now is the time to look through your CRE (Commercial Real Estate) portfolio to see how you can prepare to hedge off the higher interest rates when it is time for you to refinance. 

Maximize a HUD Mortgage 

One method sponsors are using is to refinance their multifamily and mixed-use properties with HUD financing. With HUD, you can go as high as 80% LTV and take unrestricted cash out to use as you desire. You could use the cash-out to purchase another multifamily or mixed-use property, do some capital improvements, or with these rising interest rates, pay down or pay off non-HUD eligible property mortgages. Your non-HUD eligible properties will have higher interest rates than a HUD mortgage, so it makes sense to reduce your overall interest rates in your CRE portfolio. For example, if you have a $10 million multifamily property with a $6 million mortgage, you could qualify for an $8 million HUD mortgage and use the $2 million cash-out to pay down or pay off your higher interest rate CRE properties, like an office, retail, or warehouse building. Recently, Howell Investment Finance locked in a HUD mortgage at 2.47% with a 35-year amortization and a 35-year term. Keep in mind that interest rates can change without notice, especially with rates starting to increase. Where do you estimate your interest rate to be when your CRE mortgages are due for refinancing? 

Benefits of HUD Financing

HUD is the only one to offer you the best financing to increase the cash flow on your properties. Some highlights of a HUD mortgage are:

• 35-year term so you may never need to refinance.
• 35-year amortization so you will greatly increase your properties cash flow.
• HUD mortgages are non-recourse, no global finances needed.
• 80% LTV with possible unrestricted cash out at closing.
• 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.

If you're looking to refinance your multifamily or mixed-use building, call Howell Investment Finance. Since 1992, they have provided a range of loan products to real estate investors in Ames, Cedar Rapids, Iowa City, West Des Moines, Sioux City, and the Quad Cities. They can help you find bridge loans, HUD, Fannie Mae, and Freddie Mac mortgages and will guide you through the maze of CRE financing so that you can make an informed investing decision. Schedule a consultation by calling (515) 233-8228 today, or learn more about their loans by visiting the website.