As published in Scotsman Guide's Commercial Edition, October 2005.
A few years ago, low rates, flexible products and favorable market conditions made it a great time to be a broker. Now that the phone isn’t ringing off the hook like before, many brokers are looking for the next big mortgage opportunity to offer their customers.
Now is the time to start thinking about apartment lending. It is on the rise and brimming with potential for brokers. For the most part, it is still an untapped target market. Apartment equity lines of credit are in demand, particularly because there’s a scarcity of lenders and brokers that can bring them to the table.
What’s the one thing that apartment owners always need? Easy access to their equity. Savvy brokers are starting to notice. Not only could apartment lines of credit offer a consistent influx of loans during the apartment-lending boom, but they also might offer an exceptional opportunity for brokers to build their brand equity by becoming their customers’ expert in these products. By partnering with the right lender, brokers gain a competitive advantage and raise their brand share by positioning themselves as the indispensable resource that their customers need to do business.
Shopping for opportunities
Apartment lines of credit, particularly stand-alone products, are hard to find because many lenders believe they’re too risky. When looking at worst-case default scenarios, mortgage-product analysts see lines of credit as having the highest probability of loss. If borrowers can’t repay the first loan, they’re certainly not going to repay the second.
But many lenders might not consider all of these products’ possibilities, particularly with investment properties. The demand is there: Market-conscious brokers are looking to tap into this opportunity by finding the right lender that can fund an apartment line of credit quickly and painlessly.
Why not just do a refi and forget the search for a good lender? In the past few years, rates have been at an all-time low. If things went well, you were able to help your customers secure a great rate, and they’ve been happy with their low monthly payments. But now rates are creeping up, and it can make more sense to keep that locked-in rate rather than refinancing into a new, potentially higher rate.
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