Market Timing: Don’t Miss This Golden Opportunity to Refinance
Monday, July 1st, 2013
By: Steve Goldman, CCIM
Nothing this good is going to last!
By Josh Howell, Vice President, First National Bank
Exclusive to Goldman Partners Realty
To borrow an old real estate proverb, it’s better to be a year early than a minute late! This saying doesn’t have the same meaning in the banking industry but certainly deserves some consideration in today’s interest rate environment.
If you have an existing commercial loan that originated with a three, five or seven year balloon and a pending maturity, you’re in luck! In almost every request I see, if the deal can be properly underwritten, there is significant interest rate savings available. A recent proposal for a simple refinance of a 14-unit project resulted in annual interest savings for the investor of over $35,000!
The current interest rate environment allows the owner to shorten the amortization period using the interest savings to off-set the resulting higher payment while sending a larger portion of the payment to the principal balance or enjoy the immediate benefit of easily increasing monthly cash flow.
Now back to the question of timing. Have interest rates reached their lowest levels? How fast will rates increase once the “bounce” occurs? Who knows? And by the time we know the answer to these questions it will likely be too late. There is never a shortage of opinion and speculation surrounding the constantly changing interest rate environment However, if you are on the fence considering a refinance, consider this fact: Commercial interest rates offered by First National Bank have increased twice in the last 30 days for a total increase of roughly 60 basis points. Don’t focus so hard on catching the perfect opportunity tomorrow and miss what may be a golden opportunity to restructure your debt today.
Josh is a Commercial Loan Officer and Certified Financial Planner® at First National Bank
He can be reached at (865) 988-2374 or firstname.lastname@example.org
First National Bank
10514 Kingston Pike
Knoxville, TN 37922