If you’ve spoken to your lender recently, then you’ve already had “the talk”. Interest rates are rising across the entire real estate market, both residential and commercial, and it’s impacting the loans that real estate investors rely on. Financing loans for rental property over the last few years was a stable process with little fluctuations in interest rates, but now it feels like lenders are re-evaluating loan pricing every other week. Lenders don’t want to make these calls almost as much as investors don’t want to receive them- it hurts the loan process and takes time & effort from both parties to move towards a new deal. Fortunately, Asset Based Lending has a solution for real estate investors looking for secure interest rates on rental loans.
ABL is excited to offer a rate lock on rental loans. This applies to long-term loans for rental property as well as Airbnb loans, or short-term rental loans. Acquiring a rate lock allows investors a 30-day period where their interest rate cannot be raised. For example, if you lock your rental loan at an interest rate of 5% and the following week sees the minimum interest rate rise to 5.5%, your loan remains locked at 5% and is guaranteed to not change if your loan closes within the 30-day period.
There is an associated fee to acquire the rate lock, typically a few basis points depending on the loan product. This small upfront cost increase can prevent a large future expense, securing the most important part of your rental loan and allowing you to maximize your incoming cash flow. Buy & hold investors can use this rate lock to keep their deals moving swiftly and safely, ensuring their projects continue to work for their business strategy and provide the best possible returns.
We offer this rental loan rate lock after the borrower once major milestones in the process are achieved. Once we have the property appraisal, borrower credit report, and two months of bank statements, we feel confident about the loan closing. These documents are the most important for lenders to determine whether the borrower is a good fit for their rental loan. If everything checks out, our team offers a rate lock that lasts 30 days and has the option for five-day extensions at an additional cost.
A major reason ABL can offer locked rental loan rates for a 30-day period is because of its business relationships. The biggest delay comes from title issues, so we partnered with a trusted title company for our borrowers to use for their closing. Having a partnership with a title company helps expedite the rental loan process and ensure your documentation is turned around with haste, especially within your 30-day lock period. The rest of the loan process is handled fully in-house, providing you the same five-star service from start to finish with the speed required to benefit from our rate lock program.
Our advice for locking your loan rate is to be timely with your documentation. The more attention you pay toward your loan process, the faster you can complete it and maintain your locked rate. 30 days sounds like a long time, but the time flies by so we recommend having all your documentation ready and to work with our partner title company so that your loan can close promptly with the best possible interest rate. No one wants to be the victim of volatile rates, nor does the lender want to reprice you!
One of the benefits of being a direct hard money lender with full control of its capital is the ability to offer flexible loan options. Our bridge and term loan programs have become trusted options for real estate investors that need fast and reliable closings. Don’t let rising interest rates hamper your ability to scale your real estate business and expand your rental portfolio. Utilize a direct lender like Asset Based Lending that can offer you rental loans with a rate lock and a reliable closing process so you can continue your real estate investment journey. If you have a deal that could benefit from our rental loan rate lock, then give us a call at 201-942-9090 or email info@abl1.net to learn more.