Adjustable to Fixed Rate Apartment Loan
Here's a unique loan. The Adjustable to Fixed rate loan. It's called the 7/6 ARM. The loan starts as an adjustable rate loan and in years two through six you can fix the rate for seven or ten years on the market conditions. The rates start in the low 3% range and the Lifetime caps are in the mid 7% range.
You could actually use this loan like a Bridge loan, only less expensive!
Let's say your investment strategy is to take an undervalued multifamily property and over the course of 2 years raise the property standards and subsequently the cash flow to resell. In the Second Year on a normal 5 year fixed rate loan, you could have a 4% or 3% prepayment penalty on the unpaid balance. For a Bridge loan both the interest rates and fees are much higher as well.
One other hassle free benefit is that there are NO TAX RETURNS required from the borrower. They will scrutinize a Personal Financial Statement, Schedule of Real Estate Owned and Bank/Stock Statements.
I invite you to call me regarding this program and see if it might fit your apartment financing strategy.
Interest rates fluctuate daily
Rates as of 04/07/2014
Term: 7 Years
Amortization Period: 30 Years
Qualifying DSCR: 1.25
Start Rates: 2.98% to 3.33% - 20 BPS Lower for loans over $2M
Interest Rate Ceiling: 7.36% to 7.78% - 20 BPS Lower for loans over $2M
Prepayment Penalty: 1 Year Lock-out, then 1% thereafter. Prepayment Penalty is waived if you convert to a fixed rate in Years 2 through 6.
Qualifying Rate: 5.75%