Advantages of Long-Term Fixed Rate Financing


1. Bravo Capital’s HUD financing products 2. Two greatest benefits to HUD financing

Bravo Capital’s HUD financing products

All of Bravo Capital’s HUD financing products are fixed rate, non-recourse and fully amortizing; please see the following examples:

  1. Section 223(f) Acquisition or Refinance: 35 year term, fixed rate fully amortizing
  2. Section 221(d)(4) Construction Loan:  I/O during construction term, followed by 40 years fixed rate fully amortizing
  3. Section 223(a)(7) HUD Expedited Refinancing:  Term can be recast to the lesser of 12 additional years and the original loan term.

Generally, property value rises over time, but even more enticing are investment opportunities before an intense inflationary period. In an era of rising prices and falling value of the dollar, property investment helps bolster wealth in a way that holding money cannot. And while loans that have floating rates fail to protect investors from spikes in interest-rate, all HUD ensured borrowers have the unique advantage of fixed lowest-in-market rates for the longest duration.

Over the past few months, there has been rising concern over inflation following trillions in federal aid distributed during the pandemic. As the era of lockdown comes to an end, the primary damper on the economy has diminished, and in turn, signs of inflation have begun to surface, from rising food and gas prices to upward shifts in property value. While some of these expenses are incurred daily, others like buying property are longer term commitments. Currently, interest rates are particularly low, enabling investors to lock into loans with favorable terms for assets that will undoubtedly appreciate substantially in the coming years.

Two greatest benefits to HUD financing

Among the most desirable loans for long-term, low-interest rate investments are those insured by HUD. More specifically, the two greatest benefits to HUD financing are the fixed-rate terms and the duration of the loans. With the 223(f) and 221(d)(4) products offering 35- and 40-year loan durations, respectively, this financing enables investors to lock into low rates for the longest duration. Nonetheless, each loan is fully assumable, ensuring that investors have the security of fixed rates without sacrificing on flexibility.

Moreover, HUD interest rates are closely tied to the 10 Year Treasury, and the 10 Year Treasury has been particularly low in recent months. Accordingly, HUD interest rates have also been favorable, and put simply, this period prior to the onset of inflation stands as a remarkable time for investment.