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How to Know When to Refinance Your Loan

Church Finance Basics

As churches work toward greater financial freedom, often the question will arise of whether to keep a mortgage as is or refinance the loan.

One of the greatest benefits of refinancing a mortgage is increased cash flow. If you can lower your mortgage payment, it will free up more money each month to be used for ministry. Of course, refinancing a loan does mean paying closing costs and fees, but depending on how much you are able to save on your monthly payment, refinancing can pay for itself in a short amount of time. Use this easy refinance calculator to see how your church can save money and increase cash flow.

Many people think the only reason to refinance is to get a better interest rate, but even when interest rates are the same, you may still want to look at refinancing if you currently have a short-term mortgage, such as a five-year balloon note. Often mortgages like these have enticing introductory rates but pose a great risk to a church's long-term financial health. A longer loan term is more advantageous for ministries and actually allows churches to pay off debt faster than they can with short-term balloon notes. See why a long loan term is beneficial for churches.

If you’re not sure your loan is as good as it can be, check out What Is Your Church Loan Really Costing You? to better understand the impact of balloon notes and interest rates on churches.

Evaluating your mortgage is an important step in strategically planning your church’s finances. If you have questions about your specific situation, please call 866.621.1787 and one of our consultants will be happy to discuss options with you.

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