Ever heard the old rule of thumb, you should only refinance if your new interest rate is at least two points lower? That may have been true years ago, but with refinancing costs dropping over the last few years, it's never the wrong time to think about a new loan! Refinancing has a number of benefits that often make it worth the up-front expenditure many times over.

When you refinance, you might be able to lower your interest rate and monthly payment -- sometimes significantly. You might also be able to "cash out" some of the built-up equity in your commercial property, which you can use to consolidate debt, add additional inventory, buy new equipment or make improvements to your existing building. With lower rates and balances, you might also be able to build up business equity faster with a shorter-term new mortgage.

All these benefits do cost something, though. When you refinance, you're paying for most of the same things you paid for when you obtained your original mortgage. These might include settlement costs and other fees, an appraisal, lender's title insurance, underwriting fees, and so on.

You might have to pay a penalty if you refinance your previous mortgage too quickly. That depends on the terms of your existing mortgage. These penalties are typical with commercial mortgages and they are normally for a set number of months/years and may increase the payoff of your existing mortgage however more often than not can be figured into the new mortgage financing. We'll help you figure it out. Our mortgage consultants are available to evaluate your current mortgage and show you the business benefits of refinancing to meet your business goals, contact us now to see how this can benefit you.

You might pay points to get a more favorable interest rate. We have numerous loan programs available with and without lender points, we will work with you to show you the variety of loan programs available to you. We always recommend consulting with your tax professional before deciding on a refinancing plan in order to take advantage of all of the business tax deductions available to you. 

Speaking of taxes, if you lower your interest rate, naturally you will be lowering the amount of mortgage interest payments you can deduct from your federal income taxes. This is another cost that some borrowers consider when refinancing their existing mortgage. We will work with you and your tax professional to provide you with detailed figures of the costs involved with your new mortgage.

Ultimately, for most people the amount of up-front costs to refinance are made up very quickly in monthly savings. We'll work with you to determine what program is best for you, considering your cash on hand, how likely you are to sell your commercial property in the near future, and what effect refinancing might have on your taxes.