Refinance Transactions

Refinancing can be a helpful tool for homeowners, commercial property owners, and real estate investors. But it is not the only tool available. It is important to understand your specific situation so you can execute the best financial strategy.

Interest rates have reached historic lows in 2020. This means that many homeowners can reduce their interest rate to reduce their monthly mortgage payments, and enjoy this benefit for the length of their mortgage loan. But a homeowner must meet certain qualifications in order to refinance. There must be proof of income. Your credit rating will also be taken into account. This means that, if your credit history has declined since you took out your initial home loan, the refinance interest rate available to you might not be any better than your current rate. It could even be worse.

It is important to understand the refinancing process before you allow any lending institution to make inquiries that could hurt your credit rating. It is also important to clearly understand your financial goals to ensure that refinancing will meet them. There are alternatives that could be better suited to your goals (for example, a home equity line of credit). A real estate lawyer can help you understand the process and find the financing tool that is right for you.

There are many ways to refinance a commercial property. It is important to be clear about your financial, business, and tax goals in order to choose the option that is right for you. For example, an individual might wish to refinance a property in the name of an LLC in order to avoid personal liability related to the property. A business might choose to refinance several properties together in a single “portfolio loan” in order to get more favorable lending terms from their financial institution.

There are many advantages and disadvantages to every different type of refinancing available for commercial properties. By working with an experienced real estate attorney, you can protect your legal interests, property rights, and financial interests throughout the entire process of refinancing.

Real estate investors employ a wide range of financing tools. Where residential homeowners often use conventional home loans, an investor might use a private loan (sometimes referred to as “hard money”). Hard money can come from individual relationships or from a company that provides this service. Investors might use a renovation loan to improve the property or find VA or FHA lending options. In many cases, investments are financed through creative combinations of several different types of financing.

Investors must carefully consider the consequences of each type of funding they use. For example, a traditional loan usually requires a six-month “seasoning” period. If the investor improves the property and refinances it in less than six months, the home may not be able to appraise at the higher value on a refinance transaction. It could, however, be sold at the higher price. This will, however, result in capital gains taxes. A real estate attorney can help investors explore all financing options and understand the obligations that come with each method.

At Costa and Associates, we help homeowners, commercial property owners, and investors find the right financing tools for their specific situation. Call (305) 827-0100 to schedule your free consultation with an experienced Miami real estate attorney.