Melissa Deal, Head of Sales, explains hownew loan products from Haus Lending are helping borrowers adapt to higher interest rates and a slowdown in housing market activity.
Rates are likely to remain high for some time
Financing rates are higher and more volatile than any time in recent memory, and the outlook on the housing market is more uncertain than it has been in a decade. This state of affairs seems likely to continue for the next 6 to 12 months, if not longer.
Borrowers are understandably worried about adjusting to this mix of conditions. The current environment has caused many active real estate investors to pause and take stock, leading to a natural slowdown in new transaction activity on investment properties. More importantly, borrowers looking to sell or refinance their renovated properties are increasingly concerned about the exit potential of their current loans against the twin headwinds of rising rates and a slower pace of home purchases.
Haus Lending can help you adapt and thrive
In the context of turbulence in the housing market, Haus Lending has introduced borrower-friendly features in existing loan products as well as launched new loan products to help borrowers navigate this environment.
At the core of Haus Lending’s efforts to meet the needs of borrowers and investors in this market are two recently launched products:
Haus Lending can help you adapt and thrive
Stabilized Bridge Loans: short term financing for rent-ready properties, with cash out options and no prepayment penalties, ideal for quick close transactions on properties that require no renovations, or to refinance existing finished projects with short term loans that are coming due.
1-year PPP (prepayment penalty) on 30-year Term Loans: long term financing on rent-ready properties with no prepay penalty after 12 months, for borrowers who are more rate sensitive, and/or for those who want to avoid the balloon payment risk of short term bridge financing.
Making decisions in an uncertain market: sell? Or rent and refi?
Consider a typical use case of a borrower who purchased a home 12 months ago, took on a bridge loan, finished renovations, and is now looking to sell in this market. Their challenge is that rates are much higher and borrower demand is potentially lower than anticipated as affordability becomes more challenging for would-be homebuyers.
What are their choices? They can choose to take a chance to sell their finished property into this weaker market, not knowing if or when it could sell and at what price. Alternatively, they can try to rent the property profitably. And here’s where Roc Capital’s new products come in.
Stabilized Bridge. The borrower can take our 12-18 month Stabilized Bridge loan with no prepayment penalty. This bridge loan would have a higher interest rate than a term loan, but provides complete flexibility on prepayment and potentially lets the borrower take some cash out in the process, based on the property’s ARV and market rent.
30-year Term Loans with 1-year Prepay. If the borrower’s time horizon for exit is at least a year, (e.g. they have a tenant with an annual lease and are not likely to sell the property within a year), the 30-year term loan option with free prepayment after 12 months could be the more attractive option in this scenario. Borrowers get the twin benefits of a lower rate compared to an equivalent bridge loan option and the flexibility of remaining in a 30-year loan if rates continue to stay high or go higher a year from now, thus avoiding the balloon payment risk associated with a bridge loan.
Check out a side-by-side comparison of the two products for an illustrative property that was purchased in 2020 and appraises for $670,000 today:
Haus Lending is here for you.
We’re here to fund your loans and enable your success. Our product offerings have been designed specifically to ensure our borrowers’ success. We provide you with unmatched resources in the market. Our team has your back and we will work tirelessly for you.
Want to learn more about Stabilized Bridge, 1-year PPP 30-year Term or our other products that can help you ride out these rough times? Call us at 1-877-GO-4-HAUS or apply for a loan today!
*Rates advertised are the lowest offered. Actual rates and offers may vary based on approval criteria, including but not limited to borrower FICO score, previous experience, period of ownership, etc.
**Leverage advertised is the highest offered. Actual leverage and offers may vary based on approval criteria, including but not limited to borrower FICO score, previous experience, period of ownership, etc.
***At this time, we are unable to lend in Minnesota, North Dakota, South Dakota, Utah, Oregon and Vermont.
Haus Lending is an affiliate of Loan Funder LLC, which is licensed as a California Finance Lender under Department of Business Oversight License 60DBO-69051. Arizona Commercial Mortgage Banker License 1002735. Florida Mortgage Lender Servicer License MLD1778. Nevada Mortgage Company (License #5100) (Loan Funder LLC) North Carolina Loan Broker Registration Filing 315. NMLS Company ID 1804080. West Virginia State Tax Department, Account #2410-0931 (Loan Servicer LLC).
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