Real Estate Investment Trends: Consider Refinancing Now

Although mortgage interest rates are as low as they’ve been since the 1960s, there are lots of indications that’s about to change. And that will have an impact on the real estate investment arena. It’s expected to be a domino effect: fluctuations in the bond market cause a ripple in the Ten Year Treasury Bond, those ripples cause mortgage rate hikes and perhaps tighter lending guidelines as well.

Fact:

Long term fixed rate mortgage interest rates are as low now as I have experienced in my 46 years as a Real Estate Investment Broker.

Action:

Investigate loan availability for your income generating properties.

Motivation:

Interest rates will increase in the near future. If any of your investment properties are financed with mortgage loans that are nearing their call date, or have variable interest rates, you must protect your investment position from the adverse impact of a future rate increase. There are numerous opportunities to refinance with very attractive long term fixed rate mortgage financing suitable for the next ten years of property ownership.

Perceived Immediate Dangers:

My leading indicators suggest that we could soon experience a dramatic fluctuation in the US bond market. That change will in turn adversely impact the rate demanded on Ten Year Treasury Bonds.

Concern:

Slight increases in the Ten Year Treasury Bond rate could potentially lead to a substantial mortgage market increase for fixed rate mortgage loan programs.

• As change occurs, the individual long term capital sources will be unsure of how much change will occur in the future.
• Justified increases in interest rate will be exaggerated to assure resale appeal for the new mortgage bonds.
• Once this rate increase process starts, the ripple effect will cause a number of otherwise reliable mortgage finance sources to become less aggressive in their lending practices.
• The reduced availability of mortgage lenders will further exaggerate the opportunity for additional rate increases.

What Does This Mean to You:

If you sense that your investment ownership position would benefit from refinancing your income properties, then take an aggressive position to step up your activity to take advantage of the cheap mortgage money and low debt coverage ratio opportunities that currently exist.

Your Next Moves:

1. Contact your favorite mortgage lender(s)
2. Ask that person for available long term fixed rate loan programs
3. Evaluate the required debt coverage ratio requirement, length of fixed term interest rate and corresponding interest rate, and loan assumption and payoff possibilities and restrictions.

Your Option:

Contact me if you sense that it would be beneficial to have lenders that I am familiar with evaluate your refinance situation.

Important Disclaimer: I do not lend money. I do not have an ownership position in any mortgage lending firms. I do not stand to receive a monetary benefit from your refinance effort – other than to hope that you may remember me in the future when it is time for you to adjust your real estate investment portfolio. That is what I do very well.

Stride Forth With Vigor!

Robert W. Nelson, CCIM, CRE

Real Estate Investment Broker and Counselor

46 years of real estate exchange experience

Pacwest Real Estate Investments, LLC