The Landscape of Interest Rates
Over the past year, interest rates have been on the rise. For investors, this translates to a more challenging landscape. A best-case scenario for a 20% down payment hovers around 8%. However, it’s essential to recognize that low rates come at the cost of points, especially for properties at a $150,000 price point. As property prices increase, the variability in interest rates becomes even more pronounced.
The Forward Commitment
Spartan Invest has introduced a forward commitment option that revolutionizes how investors secure financing at a 30-year fixed interest rate. Historically, these offers have only been made available on new construction deals when home builders have a wide selection of inventory. Lumping all properties together on a rate lock ourselves allows us to commit a lower, locked interest rate on our properties for investors until the rate lock expires.
How it Works
- Agreement: Before the investor purchases the property, the buyer and the lender agree on the terms of the forward commitment, including the interest rate, the loan amount, and the duration of the commitment.
- Rate Lock: Once the terms are agreed upon, the lender “locks in” the buyer’s interest rate. This means the buyer is guaranteed to receive a loan at that specific interest rate, regardless of future interest rate fluctuations.
- Timing: Forward commitments often have a predetermined time frame for the buyer to secure the loan and close the real estate transaction. Depending on the agreement, this could be 30, 60, or 90 days.
- Property Purchase: After the forward commitment, the buyer finds and purchases the property. They can secure financing at the agreed-upon interest rate when ready to close the deal.
Forward commitments are especially valuable when interest rates are expected to rise. By locking in a lower interest rate in advance, buyers can secure more favorable financing terms and potentially save money over the life of the loan. However, forward commitments are not available in all real estate markets or from all lenders.
The Benefits of the Forward Commitment
- Lower Upfront Costs: One of the most significant advantages is the reduction in upfront costs. With the forward commitment, points become a thing of the past. Instead, the cost of buying down the interest rate is rolled into the property price, increasing it by a set amount (e.g., $7,000).
- Stable, Low-Interest Rate: The forward commitment allows investors to lock in a low interest rate. What sets this apart is that it’s not a temporary promotion or an adjustable rate; it’s a 30-year fixed rate.
- No Need for Refinancing: Traditional loans often require refinancing to secure a lower rate. With the forward commitment, investors can sidestep the hassle of refinancing, saving time and money.
Why the Hesitation?
There’s essentially very little risk to investors taking advantage of the Forward Commitment. Spartan Invest, however, employs a meticulous, data-driven approach to minimize risks for investors. By purchasing the low rate upfront for multiple properties in our inventory, we absorb the risk for investors.
Given the uncertainty surrounding future interest rates and the uniqueness of the forward commitment, the time to act is now. Waiting on the sidelines, hoping for rates to drop back to historic lows, might not be the wisest strategy. The current offer provides stability, predictability, and potential cost savings for investors, which are benefits that shouldn’t be overlooked.
By taking advantage of the forward commitment, you’re locking in a favorable interest rate and securing your financial future in real estate with a 30-year fixed rate. For decades, you won’t have to worry about refinancing or interest rate fluctuations.
Conclusion
In conclusion, Spartan Invest’s forward commitment is a game-changer for real estate investors. It offers stability, lower upfront costs, and a 30-year fixed interest rate. If you’ve been on the sidelines, waiting for an opportunity to enter the real estate market, now is the time to consider the forward commitment. It’s a pathway to financial security and a successful real estate investment journey.
All properties listed on Spartan Invest’s website are eligible for this special interest rate. Shop Properties