Interest rates in general have fallen sharply by 25-35 basis points in recent days. This reduction in interest rates offers owners of both “owner occupied” and “investment” properties the opportunity to lock in a favorable rate on either a new purchase or refinancing of an existing mortgage loan.

Lenders have been aggressive in seeking out new loan opportunities, particularly in the owner occupied commercial real estate market, and are offering low rates and longer amortization periods to attract new loans.

In fact, a number of lenders have opened their portfolios to investment properties, offering attractive terms, including relatively low rates and long amortization periods. In some cases, the permitted loan to value can be up to 85 percent.

Many borrowers who borrowed 5-10 years might be near the end of that term and facing the requirement to refinance into a new loan. These borrowers might find it attractive to refinance into a new loan with longer maturity to:

Lock in a new, lower rate for a longer period of time
Eliminate concerns about refinancing again in the next few years
For example, presently available interest rates on owner occupied properties are as low as 3.85 percent for a loan having a 7-year term and up to 20-year amortization and, on an investment property, a rate of 4.35 percent and an amortization of up to 25 years. In both cases, a loan to value of up to 85 percent is available.

An example of one of these alternatives for an owner occupied property is:

Lowering the monthly payment –

Original Mortgage Re-Financed Mortgage
Amount $1,500,000 $1,252,756
Interest Rate 5.25% 3.85%
Amortization (yrs) 20 20
Term (yrs) 7 7
Monthly Payment $10,107.66 $7,492.80
Monthly Savings $2,614.86
Annual Savings $31,378.32

If there is an interest in evaluating your individual situation, whether owner occupied or investment property, contact Stephen Barnett, Managing Partner of WhiteKnight Solutions, at 561.953.1421 or steve@whiteknightsolutions.com.