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It’s Time to Refinance: What Real Estate Investors Need to Know About Mortgage Rates

Up And Down Arrows And House On Seesaw On Wooden Desk

Interest rates affect many aspects of the economy and investing, such as inflation, bank lending, supply chain breakdowns, home affordability, and Treasury yields. This blog post will cover what you need to know about interest rates for your Real Estate Investments.

Zooming Out

Interest rates aren’t as high as you may think. As busy real estate professionals, it’s easy to get distracted by the nuances of your projects. To really understand where interest rates are, you first need to zoom out a few years. Landlord DSCR interest rates were up between 5% – 6%, with good credit back in 2019. Even during the start of the pandemic, rates were in the 6% – 7% range for a while. So, over the past few years, interest rates have been pretty steady – even still slightly lower than usual. 

“While rates are up significantly from their pandemic lows, they remain at or even just under pre-pandemic levels. In 2019, the average rate on a 30-year mortgage was just under 4%, according to Freddie Mac data.” 

How Interest Rates Affect Your Investments

With the unprecedented housing market, home prices have skyrocketed, and therefore property value is incredibly high. Once you purchase a home, you have access to instant equity many times.

What does that mean for you as a real estate investor? You’ve earned equity on your property, and now it’s time to pull it out. Rather than wait for interest rates to change, refinance now! Interest rates are predicted to continue to increase over the year, so right now is the best time to capitalize on the value of your properties. 

New Possibilities

Interest rates are one of the factors impacting new and exciting lending capabilities. Lower rates coupled with low inventory and hungry buyers have opened up new profit opportunities. Before 2020, it wasn’t possible to secure a 30-year Landlord DSCR loan on a short-term rental property. Now, not only can you explore this possibility, but you can splurge on a high-end rental property thanks to potential Airbnb/VRBO short-term rental income. You can still get a 30-year Landlord DSCR loan for long-term rentals with at least two payments from the renter. 

However, rather than needing an immediate lease and documentation of two months of payments received, all you need is to show that short-term rental income can cover the loan. Vacationers will often rent Airbnb and VRBO properties in excess of $10k per week if you have a luxurious property. 

The lender reviews the market of the Airbnb or VRBO rentals and appraisals and can consider that future income as sufficient. That’s how you can qualify for a million + dollar loan with a low rate. There is still no need to look at an individual borrower’s W2 income and debt-to-income ratio to be eligible for the property. Now that there are ways to get comparables for short-term rental properties to say what you “should get” for the year, you don’t need a 12-month lease.

Check out this Airbnb listing! Highclere Castle, Home of Downton Abbey, is Now Available to Book. 

Now is an exciting opportunity to expand your portfolio, qualify for more properties, and potentially earn thousands more in rental income every month. Still have questions? We’ve got your answers! The team at Builders Trust Capital is focused on building a long-term relationship with you. Continuing to partner with us has its advantages. We leverage our knowledge of your business, project, and financials to help serve you better. Contact us today!

Builders Trust Capital Client Success Stories

Partner with an efficient, personable team who has delivered $190,000,000 in real estate loans

Builders Trust Capital Success Story Photo: 1185 Route 9 South, Cape May Courthouse, NJ
  • Purchased $185,000
  • Rehab $150,000
  • ARV $475,000
  • Fix & Flip Philadelphia, PA
Builders Trust Capital Success Story Photo: 10 Anderson, Morristown NJ
  • Purchased $1,675,000
  • Rehab $450,000
  • ARV $3,955,000
  • Fix & Flip Cape May, NJ
Builders Trust Capital Success Story Photo: 10 Anderson, Morristown NJ
  • Purchased $550,000
  • Rehab $208,286
  • ARV $1,005,000
  • Fix & Flip Haddonfield, NJ

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Photo of Alexandra Petruchenya

I appreciate your team's support during the entire rehab process for my property. This is my first deal, there were a lot of unknowns that came with that. The construction process intimidated me and held me back from doing real estate for several years. Kurt has been phenomenal, he was a wealth of knowledge. I appreciate how he gets in touch to talk through in-scope item completion and aligning on ways to ensure my construction draws are adequate. I'm thankful to have someone who has my business's best interests at heart.

Alexandra Petruchenya recommends Builders Trust Capital Oct. 2021
Photo of Sharina Jackson

I recently completed a cash-out refinance transaction with Builders Trust Capital. I would like to say thank you to Anthony for your partnership during this process, your excellent customer service and professionalism made the process easy for me.

Sharina Jackson recommends Builders Trust Capital Oct. 2021
Photo of Raphael Akinsete

If you are a newbie investor, I highly recommend Builders Trust Capital because your first few deals will impact your outlook on real estate investment. If you are a seasoned investor, I also recommend the company as they now offer products for both quick flips and long holds. This way you are covered in both your entry and exit strategy. As a longtime client of Builders Trust Capital I can testify that they are the real deal and there are genuinely good people behind this business.

Raphael Akinsete recommends Builders Trust Capital Oct. 2020
Photo of Kristian Latham

Just finished up my first project with the Builders Trust Capital team and wanted to share my appreciation for the good business. Success is often driven by effective relationships, and Builders Trust Capital’s partnership assisted me in strengthening my team all around. The process from beginning to end was smooth and efficient. They are a great partner to have to create opportunities for rookie and veteran investors.

Kristian Latham recommends Builders Trust Capital Aug. 2020
Photo of Timothy Rosenblum

Builders Trust Capital lives up to its name. They have truly been a partner to me with my projects. The process from underwriting to construction inspections has never wavered from their initial promise and Ive always been met with professionalism and efficiency. Rare in this space.

Timothy Rosenblum recommends Builders Trust Capital Apr. 2021
Photo of Mike Bonadies

Builders Trust Capital is an incredibly responsive and flexible lender for RE investors. They have been able to work with my unique situations and helped us close on properties no one else could. They know their local area well and can offer guidance. I highly suggest them.

Mike Bonadies recommends Builders Trust Capital Apr. 2021

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