Home Lending Solutions Tailored to Your Needs

Whether you are looking to build the family dream home or purchase a vacation residence, buyers today are seeking efficient financing solutions through the lens of an economic environment where inflation, changing interest rates, and elevated costs to borrow money continue to be concerns.

Incorporating the purchase or building of a home or residential property is a vital component of a comprehensive wealth plan. At Commerce Trust, we can structure tailored lending solutions to meet the distinct needs of our clients as part of a holistic wealth management approach, taking into account both sides of a client’s balance sheet.

Strategic borrowing can play an integral role in allowing homeowners to build, buy, or refinance an existing or second residential property. At Commerce Trust, your private banking relationship manager can engage our financial planning and asset management client service specialists to research and present lending solutions that consider different assets you may be able to leverage.

Contact us if you are interested in learning more about how our private banking relationship managers can help you with your home financing needs.

Multi-Collateral Loan

When purchasing an expensive home or piece of luxury real estate, the down payment can be a matter of managing a significant cash flow event. Buyers and owners may consider cashing out on the equity accumulated in an existing home or selling stock in an investment portfolio. However, liquidating portfolio assets for a down payment may not align with your investment strategy, possibly impacting your longer-term financial goals.

A multi-collateral loan is a unique financing option that leverages eligible assets in an investment portfolio or trust by pledging — not selling — securities to purchase a new home. This type of loan allows the homebuyer to keep their investment portfolio intact and possibly avoid triggering a taxable event that was unplanned while enjoying the benefits of a traditional mortgage.

And even if the homebuyer has enough cash on hand to cover the down payment, a multi-collateral loan provides the option to use that cash to pay for home improvements or other personal expenses instead.

Construction Loan

A custom home gives homeowners the freedom to design every feature and finish of a new home to their specifications. A construction loan is an effective way to turn that vision into a reality.

Generally, construction loans are acquired once all home building plans are finalized. Construction loan providers typically offer the borrower a loan based on a percentage of the projected value of the house once constructed.

When the building phase is completed, the construction loan is paid back immediately, and a more traditional long-term mortgage is put in place. 

At Commerce Trust, our private banking relationship managers serve as the single point of contact to coordinate the construction financing process between the builder, subcontractors, and the title company. The Commerce Trust team will work to lock in the end loan interest rate before construction starts, communicate proactively, and provide personal service to clients for the life of the loan such as collecting lien waivers, reviewing copies of checks written to builders to confirm intended use, and serving as a client advocate to address potential financing challenges.

Loan Modification

Today’s higher interest rate environment may have some homeowners re-evaluating their cash flow needs. A loan modification allows borrowers to react to changing interest rates with flexibility, as modified rates can take effect as soon as the next month with little paperwork.

If a client opens an adjustable-rate mortgage (ARM) home loan with Commerce Bank, the interest rate for the ARM can be reduced when interest rates decrease. There is no limit to the number of times the loan can be modified, and each modification resets the period for which the rate is fixed.

For example, if the interest rate on an ARM that is fixed for 10 years on a 30-year term mortgage is higher than current market rates, modifying the loan to match a lower rate fixes the rate for another decade or until the loan is modified again.

The loan modification process can also save borrowers time and expense relative to refinancing a home, as modifying a loan does not require any appraisals, title work, or asset verification. Traditional refinancing also typically requires the homeowner to meet certain home equity and credit rating standards, both of which are not a factor when modifying an existing loan. Crucially, a loan modification does not change the amortization schedule, which means borrowers can put a higher percentage of their payment toward the principal instead of paying more toward interest.

While there are risks related to this type of loan program, most notably when interest rates are rising, pursuing a loan modification may offer cash flow advantages in certain circumstances for homeowners who want to maintain their liquidity or allocate their cash to other expenses.

Exploring Home Lending Solutions That Are Right For You

From sophisticated financing structures to checking and savings, The Private Bank at Commerce Trust works to meet the ever-changing needs of our clients with personalized banking solutions tailored to each client’s unique situation.

Visit commercetrustcompany.com to contact a private banking relationship manager and learn how we can work together to find a lending solutions that fits your needs.

The Private Bank at Commerce Trust is a business unit of Commerce Trust, a division of Commerce Bank, Member FDIC.

The Private Bank at Commerce Trust supports the markets and communities within our geographic regions and reserves the right to limit the geographic area in which loans will be made. The Private Bank at Commerce Trust does not lend in Maryland.

Multi-collateral loan programs require the pledge of eligible securities owned by an individual and maintained in a Commerce Trust account.

These programs may not be suitable for everyone, and a default on your mortgage could result in the loss of both your home and your securities. Should the value of the securities pledged as collateral decrease below a certain level (as specified within the loan documents), the deposit of additional assets and/or liquidation of assets may be required.

Commerce Trust may liquidate some or all of the securities in the account without contacting you. You are not entitled to an extension of time to meet a collateral call or choose which securities in your account are sold to meet the collateral call. Liquidation may result in adverse tax consequences. Mortgage interest may not be deductible if tax-exempt obligations are pledged as additional collateral. Trading within the securities account for the multi-collateral loan programs is subject to restrictions.

The Private Bank at Commerce Trust is a business unit of Commerce Trust, a division of Commerce Bank, Member FDIC.

The opinions and other information in the commentary are provided as of February 28, 2024. This summary is intended to provide general information only, and may be of value to the reader and audience.

This material is not a recommendation of any particular investment or insurance strategy, is not based on any particular financial situation or need, and is not intended to replace the advice of a qualified tax advisor or investment professional. While Commerce may provide information or express opinions from time to time, such information or opinions are subject to change, are not offered as professional tax, insurance or legal advice, and may not be relied on as such. 

Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.

Commerce Trust is a division of Commerce Bank. Investment Products: Not FDIC Insured / May Lose Value / No Bank Guarantee

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