Unfortunately, most investors don’t have 30-year fixed mortgages. They are usually fixed for five years. So when those renewals hit, your interest rate, and thereby your mortgage payment, spike. This was a large factor in the multifamily recession in 2023 and 2024.
These days, whenever one of our loans is up for renewal, we ask to reamortize or recast the loan. In short, we reset the amortization at the beginning as if we were refinancing it.
Given the principal has been paid down and prices have gone up, our banks have been willing to do this without a new appraisal or refinance fees. On one portfolio loan, for example, our interest rate reset from 4.25% to 8%! Yet because we reamortized it, our payment actually went down.
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