Refinancing a mortgage might be an excellent method of saving some money and even accelerating the repayment of your commercial property mortgage.  Unfortunately, folks typically do a refinance to extend their term and therefore reduce their payments. Any time you extend the term you’re agreeing to pay more for your mortgage in the long-run.

Mortgage refinancing might be an excellent financial move so long as you follow a few key guidelines.

Guidelines to Think About as You Refinance Your Mortgage

Do not extend the loan’s length. Keep in mind, your goal within this process includes getting out of debt.  The quickest way for that to occur is to take as short of a term as you can. That is how a mortgage works. If you’re going to utilize the refinance as an excuse to extend the mortgage, skip a refinance.

Think about decreasing the loan’s length if it fits into your budget percentage classifications – 25 to 35 percent of your take-home income.  As a matter of fact, if you’re decreasing your rate and it is possible to deal with a slight increase of month-to-month payments you’ll save a lot of money over the lifespan of the loan.  For instance, for a $150,000 loan at 6 percent over thirty years you’ll have a month-to-month payment of $900 and you’ll pay an overall sum of $324,000. If you had the ability to decrease your rate to 5.5 percent and obtain a 15-year loan you’d pay $220,590 over the lifespan of the loan.  The payments would be about $1225.50 a month.

Call several banks.  As banks always are competing, do not simply visit the local branch.  Shop around and make certain that you’re getting at least the nationwide average.  

Negotiate. If you feel more comfortable with one company yet their rate isn’t as competitive, do not be afraid to inform them of the situation.  Use a simplistic tip for negotiating – ask if they’re able to do any better.

Anticipate all plans. If you have plans to or may move within 2 years the refinance may not make sense.  Using the refinance worksheet link below you’ll have the ability to discover how valuable a refinance is going to be if you have plans to move soon.

Do not add anything more to your mortgage. People sometimes utilize a refinance as an excuse to borrow more funds.  Again, it’d be a step in the wrong direction. Do not borrow more funds. As a matter of fact, paying off the mortgage early may be an excellent idea.

Stick to a fixed rate loan. A fixed rate is predictable.  As it’ll come to your commercial property you have to have the security of knowing it’s possible to afford mortgage interest rates.  Any substantial increases will be too expensive.

When Are Mortgage Refinances A Good Idea?

• When you do it does not force you to assume any additional risk (assuming that you use the above guidelines).
• When you save money (see a free refinance worksheet here).

For more information contact the commercial property management of Pyramis Company today!