4 Common Refinancing Mistakes to Avoid in MultifamilyBrian Hansen
At Bonneville Multifamily Capital, refinancing a multifamily real estate loan is one of our specialties. We’re here to help find you the perfect multifamily lender for your refinance, and put you in a position to open up significant financial flexibility.
Refinancing can be a great way to open a few things up, but if you make the wrong choices during it, it can also be a way to complicate your finances even further. Let’s look at a few of the common pitfalls people run into when refinancing a multifamily mortgage, and how you can avoid them.
The entire mortgage world changed when the housing bubble burst years ago, and these changes are still being felt. A commonality between now and the burst is this is that many people still overvalue their home, especially during a refinancing situation.
In many cases, lenders will want to see at least 20 percent equity before they’ll approve a refinance. This makes it vital that a knowledgeable, third-party appraiser has given the home a realistic and fair value. In fact, you should have an appraisal performed well in advance to give you an idea of whether refinancing is the right move in the first place.
Wrong Loan Term
Refinancing can get you a better interest rate, and it can also change the term of your loan. Many people give less consideration to the latter of these factors, but this can be a mistake – the way you alter your term can have a significant effect on payments and interest rates, and picking the wrong one could put you in a worse spot than before. Crunch the numbers and figure out which new loan term is appropriate, or whether staying at the old one might be right.
Holding Out Too Long
There are times where it can be good to hold out for a better rate, but in a constantly-fluctuating market, this is a risky business. If you have a good deal in front of you, holding out could make it better – or could make it worse. Locking in the rate guarantees it, regardless of the closing process.
Forgetting Closing Costs
Closing costs can be steep in many situations, and you need to be ready for it. Consider application fees, appraisal fees, title fees and potential attorney fees if the situation calls for it. Ask about these elements well in advance, and factor them into your calculations.
To learn more about refinancing, or any of our other multifamily mortgage services, speak to the experts at Bonneville Multifamily Capital today.