Can You Refinance a HUD 221(d)(4) Loan?
If you get a HUD 221(d)(4) loan to create a multifamily development, can you refinance that loan later? The answer is yes, and you can do use the HUD 223(a)(7) program to do so. The program, which is designed specifically for current HUD multifamily and healthcare borrowers to refinance their projects, offers some pretty amazing terms.
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If you get a HUD 221(d)(4) loan to create a multifamily development, can you refinance that loan later? The answer is yes. And, you can do use the HUD 223(a)(7) program to do so. The program, which is designed specifically for current HUD multifamily and healthcare borrowers to refinance their projects, offers some pretty amazing terms.
HUD 223(a)(7) Program Specifications
In many situations, a HUD 223(a)(7) refinance can help reduce the interest rate and improve cash flow, reducing the risk of default. Fortunately for owners/developers, no appraisal, market study, or environmental assessment are needed. Instead, only a capital needs assessment (CNA) is required. The only cost is 0.3% of the loan amount (which is due at application), half of which will be refunded at closing. Plus, HUD 223(a)(7) programs typically only take around 60 days to close, which is a lot speedier than the regular HUD 221(d)(4) loan process.
Lastly, just like regular HUD 221(d)(4) loans, loans through the 223(a)(7) program are non-recourse and fully assumable.
To learn more about getting or refinancing a HUD 221(d)(4) loan for your multifamily development, fill out the form below and a HUD 221(d)(4) loan specialist will get in touch.
Related Questions
What are the benefits of refinancing a HUD 221(d)(4) loan?
The major positives of refinancing a HUD 221(d)(4) loan with the 223(a)(7) program include:
- Increased cash flow
- Reduced interest rates (potentially)
- Increase amortization
- Reduced chance of default
- Reduced cost of debt service
- Only a single third-party report is required, a project capital needs assessment (PCNA)
What are the requirements for refinancing a HUD 221(d)(4) loan?
The HUD 223(a)(7) program is designed specifically for current HUD multifamily and healthcare borrowers to refinance their projects. The requirements for refinancing a HUD 221(d)(4) loan include:
- Full scope of third party reports (environmental assessment, market study, appraisal, etc.)
- Must undergo annual review
- Bonded and licensed general contractor
- Must be in compliance with Davis Bacon wage requirements
What are the risks associated with refinancing a HUD 221(d)(4) loan?
The risks associated with refinancing a HUD 221(d)(4) loan include:
- The potential for increased debt service costs
- The potential for increased interest rates
- The potential for reduced cash flow
- The potential for reduced amortization
- The potential for increased chance of default
Source: HUD 221(4) Loan Refinancing
What are the costs associated with refinancing a HUD 221(d)(4) loan?
The only cost associated with refinancing a HUD 221(d)(4) loan is 0.3% of the loan amount, which is due at application. Half of this fee will be refunded at closing. Additionally, no appraisal, market study, or environmental assessment is needed. For more information, please see HUD 223(a)(7) Program Specifications.
What are the steps involved in refinancing a HUD 221(d)(4) loan?
The steps involved in refinancing a HUD 221(d)(4) loan are as follows:
- Apply for a HUD 223(a)(7) refinance loan.
- Pay the 0.3% loan amount fee at application.
- Undergo a capital needs assessment (CNA).
- Close the loan in around 60 days.
For more information, please refer to HUD 223(a)(7) Program Specifications.
What are the alternatives to refinancing a HUD 221(d)(4) loan?
The HUD 223(a)(7) program is designed specifically for current HUD multifamily and healthcare borrowers to refinance their projects. Other refinancing methods include Fannie Mae®, Freddie Mac®, and life insurance company loans.
Fannie Mae® offers a variety of loan products, including fixed-rate and adjustable-rate mortgages, as well as hybrid adjustable-rate mortgages. They also offer loans with low down payments and flexible credit requirements.
Freddie Mac® offers a variety of loan products, including fixed-rate and adjustable-rate mortgages, as well as hybrid adjustable-rate mortgages. They also offer loans with low down payments and flexible credit requirements.
Life insurance company loans are typically long-term loans with fixed interest rates. They are often used to finance large projects, such as multifamily developments.