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Why Lend is Increasing Interest Rates

Written by: 
Dani Lang

Why Lend is Increasing Interest Rates

We are excited to announce the launch of our second mortgage through Lend, 157 Wells, a property situated in our Atlanta market. As Lend continues to grow, we remain committed to not only participating in the mortgage market but to reshaping it.

Fantastic Financial Instruments

At Landa, we firmly believe in the sheer potential of mortgages. They are exceptional financial instruments, yet are not popularly adopted by retail investors. This underutilization often stems from the historically high fees tied to mortgages, largely imposed by sizable financial institutions.

Navigating through double appraisals, title costs, and legal bills isn't just expensive. It's complex and can deter investors seeking a more straightforward and hassle-free investment approach.

Unraveling the Tangled Web of Mortgage Fees

In traditional mortgage transactions, it's common for both the investor (or lender) and the borrower to part with a significant 3-5% of the total transaction amount in fees. This mortgage journey involves loans passing through multiple parties: from the originator to an investment bank, and finally to the investor. Each party takes a cut, culminating in substantial expenses. So, when all's said and done, we're looking at some seriously elevated fees.

On top of all this, if a default happens, you've got to consider the added burden of legal fees and foreclosure costs. These can introduce significant financial challenges for everyone involved.

Enter, Lend, a debt fund that stands out in the market for its accessibility and simplicity while offering competitive interest rates.

How Lend is Revolutionizing the Mortgage Process

  1. Streamlining the Mortgage Process: We're taking the middlemen out of the picture – no more mortgage brokers, loan originators, investment banks, or loan servicers. What does that mean for you? A smoother, low-fee investment experience.
  2. Leveraging Real-Time Data: In the age of digital information, real-time data is invaluable. That's why we're harnessing real-time data to keep our investors in the loop. You get all the insights you need to understand your investments better.
  3. Clear-Cut Loan Agreements: We believe in transparency. We're committed to providing clear-cut loan agreements so that investors know exactly what they're signing up for.
  4. Benchmark Interest Rates: We're all about alignment with the market. That's why we use the Secured Overnight Financing Rate (SOFR) as our benchmark. This is the interest that banks charge each other for short-term, overnight loans. By sticking to the SOFR, we're ensuring our interest rates are transparent and accurate. Plus, we're factoring in any additional risk that mortgages might carry.
Source: St. Louis FED, July 2023

A new base rate

So here's the deal. In line with our commitment to transparency and market evolution, Lend is adjusting its base rate. Instead of SOFR + 2%, Lend is now offering SOFR+3.5%. This new base rate covers the entire mortgage cost, free of hidden fees and showcasing the genuine cost of capital.

We've taken a good look around, and in today's world, SOFR + 3.5% makes a lot more sense. It's in line with what it costs to get capital these days and it's on par with what other lenders for rental real estate properties are asking for.

We're making this change now, and we're planning for it to stick around for a good while. Our eyes are always on the market in order to ensure that our rates stay competitive for everyone involved – our Lend and property investors

In short, we're committed to keeping our rates in the game. It's all about being flexible and navigating a dynamic market.

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