June 13, 2018
With Float-to-Fixed, a Borrower seamlessly converts a 2-year floating-rate loan into a 7-year fixed-rate execution while having the opportunity to borrow up.
Here’s how it works: Whether in their portfolio or an acquisition, a sponsor identifies an asset requiring light improvements. During the initial 2-year IO period without an interest rate cap, the sponsor implements a modest renovation and improves the asset’s performance. At the beginning of the third year of the loan, it automatically converts to a fixed-rate execution while giving the sponsor the chance to increase proceeds at then first-mortgage pricing.
Float-to-Fixed is currently available for sponsors transacting through our Conventional and select Targeted Affordable Housing (TAH) programs – some exceptions apply – and does not require renovation requirements.
Your Freddie Mac representative is ready to talk to you about the details and other benefits of our Float-to-Fixed loan.
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