Federal Reserve Announces Likely Rate Hikes

Since the economic crisis and financial meltdown in 2008, the Federal Reserve has kept the Fed Funds rate at very close to zero. The Fed Funds rate is the rate that the Federal Reserve charges to its member institutions. By keeping this rate very low, banks and other financial institutions have been able to keep the interest rates they charge to their customers at historically low rates. This has allowed individuals to buy homes, cars and other large items at very low rates – stimulating an economic recovery. Business customers and commercial real estate owners have likewise been able to buy and refinance commercial property at historically low rates. Most consumer and business loan rates are tied into the rates in the United States treasury market. Since the Fed funds rate has been so low, United States treasury securities have also been very low for the past seven years.

The Federal Reserve is starting to reassess their strategy and have announced that it is likely that rates will begin to rise between now and the end of this year. An increase from the Federal Reserve will cause an increase in the United States treasuries, which in turn will mean an increase in the rates charged to consumers and business owners. For more information on likely policy from the Federal Reserve, click this Washington Post article.

If you are considering purchasing a new commercial property, investment property, or refinancing the debt on your existing commercial mortgage loan, you should consider acting now before rates increase. For more information, please contact us at 1-877-548-9454 or visit our website at www.selectcommercial.com.

How to Find a Commercial Lender that Specializes in your Needs

Many of our applicants ask why they should do businesses with Select Commercial and not their local bank. Select Commercial is a commercial mortgage banker with access to capital from many different sources including Wall Street investment banks, insurance companies, national commercial banks, local savings institutions and many others. Accordingly, we are able to provide many different loan programs to meet in individual borrower’s needs. Whereas a local bank has a specific set of lending guidelines, we are not limited to any one institution.

Some examples include:

Cash-Out Refinances – These days, we see a large number of requests from borrowers seeking to refinance their commercial properties and obtain cash out for other purposes, including reinvestment. Many local banks are very hesitant to allow these cash out refinances. Borrowers seeking cash out from their properties are often turned away. We have no hesitation making cash out refinances to commercial property owners. Just this week, Select Commercial provided a loan to a small property owner in which he took over $1 million of cash out from his property.

Property Types – Select Commercial lends on all types of commercial and apartment properties. We have programs for owner occupied properties as well as investor occupied properties. We have years of experience lending on specialty properties such as motels, gas stations, restaurants and many other property types traditionally shunned by other commercial lenders. No one single bank can possibly satisfy all of these requests.

Loan Terms – Many, if not all, banks like to limit their fixed-rate loans to five-year terms as they do not want to take on unnecessary long-term credit risk. At Select Commercial, we often make fixed-rate loans for 10, 15, 20, and even 30 years. We also offer longer term amortizations than most local banks.

Borrower Credit – Most banks require that their borrowers have perfect or excellent credit in order to qualify. In real life, borrowers often have minor blemishes or events that have caused a temporary setback. We are willing to listen to the story and lend despite past problems. As long as a borrower demonstrates that the problems have been corrected, we are willing to lend when other lenders are not.

Rates – Local bank’s rates are often high as they need to pay for deposits and to maintain their branches. By accessing the capital markets, we are often able to provide much more competitive pricing than these local institutions. Our Wall Street investment banks and insurance companies provide pricing on a national level and not based on any one local market.

Recourse – Almost every single local bank will require that a borrower sign the loan personally. Many borrowers do not wish to put their personal assets on the line for a commercial real estate investment. Very often, our investors will not require personal guarantees. This is a very important issue should not be overlooked.

Certainty of Closing – We have seen many examples of banks making promises, and then after months of processing, their loan committees change the terms of the loan approval. This often results in the borrower canceling or delaying the closing. We are proud of our reputation for delivering approvals on the same terms as originally quoted, and timely closings.

Application Fees – Most banks will collect an application fee in order to review your application. This fee is often nonrefundable even if you do not accept the terms the bank proposes. At Select Commercial, our application process is without cost or obligation. We will review your information, and if we like the transaction, we will issue a written letter of intent spelling out the terms of the approval upfront. We do not collect an application fee for this service. Should you choose not to proceed with our loan approval, you may cancel without cost or obligation.

 

If you have a specific transaction that you would like to discuss with us, please feel free to call 1-877-548-9454 or click here to request a free quote.