Your apartment loan matures in 18 months and rates have doubled: how a refinance gets done

The maturity date on your loan statement is closer than it looks

If you bought or refinanced an apartment property around 2021, you probably locked a rate that felt normal at the time and looks like a gift now. That loan has a maturity date, and for a large share of Dallas–Fort Worth owners it lands in late 2026 or 2027. The property may be performing well. Occupancy may be up. And you still have a problem, because the new loan will be priced in today's market, not the one you bought in.

Here is the arithmetic we walk owners through at Terrydale Capital. Take a ten-million-dollar Dallas loan at 3.4 percent. Annual debt service runs about 340,000 dollars. Refinance the same balance near 6.5 percent and debt service is roughly 650,000 dollars. The property did not change; the cost of carrying it nearly doubled. That gap has to be closed through higher rents, lower distributions to investors, a smaller loan with more equity, or some combination.

In our market tracking, more than two billion dollars of DFW multifamily debt matures in the second half of 2026, with another 1.69 billion in the first quarter of 2027 and 1.46 billion in the second quarter. You are not the only owner facing this, which means lenders will be busy and the ones who are organized early will get the better execution.

Why a performing property can still fail to refinance

Owners are often surprised that a full, well-run building cannot simply roll into a new loan at the old balance. Lenders size a loan from the property's net operating income and today's rate, not from the last appraisal or the purchase price. When the rate rises, the same income supports a smaller loan. That is the whole problem in one sentence.

Other issues pile on top. A property still in lease-up or mid-renovation may not have the trailing income a permanent lender needs. The sponsor's other properties, liquidity or credit may have changed. If your insurance or tax bill has risen since the loan was written, that eats into the income lenders underwrite. Title, survey and environmental items that were waved through in a hot market get scrutinized now. Since I moved into commercial mortgage banking in 2012 I have rarely seen a deal with none of these; the question is whether someone is managing them.

• Loan proceeds are driven by debt yield and debt service coverage at today's rate, so a higher rate means a smaller loan.
• Any increase in insurance, tax or payroll costs since acquisition reduces the net operating income being underwritten.
• Lease-up or value-add properties lack the stabilized trailing twelve months that agency and bank lenders want.
• Sponsor changes, partnership disputes or an operating agreement that no longer matches reality slow the approval.
• Phase I environmental, survey and title exceptions that were never cleaned up resurface at refinance.

Run these numbers yourself before you call anyone

You can get a realistic picture of your position in an afternoon with your trailing twelve-month operating statement and your current loan documents. Start with net operating income as it actually is today, not the pro forma from acquisition. Then look at where current commercial index rates sit; we publish them on our site, and so do the agencies. Apply a realistic spread on top of the index to estimate the all-in rate.

From there, calculate the loan amount that today's income supports at that rate with a coverage ratio a lender will accept, and compare it to your payoff balance. If the new loan covers the payoff with room to spare, you have a straightforward refinance. If it falls short, you now know the size of the equity you will need to bring or the gap a bridge loan would have to cover. Either way, you walk into the lender conversation knowing the answer before they tell you.

• Pull your trailing twelve months of income and expenses and your current rent roll.
• Confirm the exact maturity date, any extension options and the prepayment terms in your loan documents.
• Check current index rates against your trailing income rather than assuming the rate you hope for.
• Calculate the loan amount today's net operating income supports and compare it to your payoff.
• List every open item from your last closing: survey, title exceptions, Phase I, zoning letters.
• Review your insurance renewal, since a premium jump changes the underwriting.

Eighteen months out is when to start, not six

Our standing advice is to open the refinance conversation on any Texas loan maturing within the next eighteen months. That sounds early until you count backward: lender selection, application, appraisal, environmental report, survey updates, title work, legal review and closing each take weeks, and any one of them can stall. Starting early also preserves options. If the first path does not work, there is time for a second.

There are situations where waiting a few months is reasonable: a property that will reach stabilized occupancy soon, or a renovation that will be reflected in the next quarter's income. In those cases the right move is to line up a bridge-to-permanent strategy now rather than wait and hope. What is not reasonable is waiting until the lender sends the maturity notice. At that point you negotiate from weakness, and the extension fee or forced sale costs far more than an early start.

If your maturity is inside that window and you have not spoken to anyone yet, this is the moment to get a second set of eyes on the deal.

What we actually do between your call and the closing table

A commercial financing advisor is not a loan officer at one bank. Our job is to take your property to the market and bring back the best fit, then manage the deal through every obstacle until it funds. We maintain relationships with banks, national lenders and family offices, and on a typical multifamily refinance we underwrite the deal ourselves first, so we are presenting a package lenders can approve rather than asking them to figure it out.

The work falls into a sequence. We review your financials and the property, identify the issues a lender will raise, and solve as many as possible before anyone sees the file. We then package the deal and present it to several lenders at once to get competing term sheets. Once you choose one, we run the checklist. On one recent closing that meant more than two hundred items, from estoppels to insurance certificates. The owner's job is to run the property; ours is to run the loan.

• Deal review: trailing financials, rent roll, loan documents, sponsor profile and property condition.
• Pre-underwriting: sizing the loan at today's rates and flagging gaps before lenders do.
• Lender marketing: presenting the package to banks, agency lenders, debt funds and family offices in parallel.
• Term sheet comparison: rate, proceeds, amortization, prepayment, recourse and reserves side by side.
• Due diligence management: appraisal, Phase I, survey, title, legal and insurance, with the checklist tracked daily.
• Closing coordination with title, counsel and the lender until funds are wired.

What determines the rate and the cost of getting there

Owners want a rate quote on the first call, and I understand why, but the honest answer is that pricing comes from the deal. The loans we have recently closed ranged from roughly 450,000 to over eleven million dollars with rates from 5.80 to 12.75 percent, and that spread is the point: a stabilized apartment refinance at 65 percent leverage with a strong sponsor prices very differently from a bridge loan on a half-empty building.

The main drivers are leverage, since lower loan-to-value earns a better rate; property stability, meaning occupancy and trailing income; sponsor strength and liquidity; the loan type, since bridge and hard money cost more than permanent debt because they take more risk; and term and prepayment flexibility. Beyond the rate, there are third-party costs for appraisal, environmental and survey work, lender legal fees, title and our fee, which is disclosed up front. We tell owners that every extra thousandth of a point on the rate adds up over a ten-year term, which is exactly why we shop the loan rather than accepting the first offer.

Choosing between a bank, a broker and the lender who called you

Your existing lender may offer to renew, and that offer deserves a look. But one lender's answer is one data point. A bank is limited to its own credit appetite, which changes with its balance sheet; a direct lender who found you online is selling its product. An independent advisor's value is comparison and problem-solving, and the right one should be able to show you both.

When you interview a financing partner, ask what they have closed recently in your asset type and in Texas. Apartments and self-storage are where we have the deepest track record, and we say so; if a broker claims to be expert in everything, be careful. Ask how many lenders they will present the deal to and whether they underwrite it first. Ask who will be on the file day to day, and how they handle a problem like a failed appraisal or a title exception. The quality of the answers tells you how the closing will go.

• Recent closings in your property type and market, with references you can call.
• A clear explanation of how the loan will be sized before anyone quotes a rate.
• Access to multiple lender types, not one relationship.
• Fee disclosed in writing before you engage.
• A named processor who will manage the checklist to closing.
• Willingness to tell you a deal does not work rather than chase it for months.

The errors that turn a workable refinance into a fire sale

The most common mistake is anchoring on the old loan. Owners assume they can refinance the current balance because the property is worth more than they paid, and they discover six months out that today's income only supports eighty percent of it. The second is accepting the first term sheet. Lenders know when a borrower is up against a maturity, and the first offer reflects that.

The third is letting diligence items drift. A survey that needs updating or an environmental report with an open recommendation takes weeks to resolve, and every week lost near a maturity is expensive. The fourth is hiding problems from your advisor. A partnership dispute, a tax issue or a lawsuit will surface in underwriting; if we know early we can structure around it, and if we learn late it kills the timeline. The last is treating the extension as a plan. An extension buys months, usually at a price, and the underlying math does not change while you wait.

What happens once you reach out to Terrydale

The first conversation is a review, not an application. Tell us the property, the current loan, the maturity date and what you want the outcome to be, whether that is a lower payment, cash out, or simply a clean takeout. Submit the deal through Terrydale Live if you want live quotes and current rates right away, or schedule a call with me if you would rather talk it through first. Either way, we will tell you honestly what the deal supports today.

From there we ask for the trailing financials, rent roll and loan documents, pre-underwrite the deal, and come back with a realistic range of structures and the issues we see. If you decide to proceed, we take it to market, bring back term sheets and manage everything through closing. Our office is in Dallas and most of our closings are in Texas, but we have closed loans in Florida, Kentucky, Missouri and Nebraska, and the process is the same. The goal is simple: a loan that closes, on terms you understand, with time to spare.

Questions people ask me