3228-3230 Eastern Avenue, Baltimore, MD 21224
Jun 14

Should I Refinance My Commercial Real Estate Loan?

Business owners have a variety of options when it comes to refinancing their commercial mortgages.

The primary determining factor in making this decision is trust.  Do you trust the lender to have your best interests at heart? Does the lender trust your ability to repay the loan? Fortunately, your Baltimore bankers at Homewood Federal Savings Bank know you and know our community, and we want to see both succeed.

When should you consider refinancing your commercial loan?

For better interest rates

This is the most common reason to refinance; it lowers your monthly loan payment. Typically this will increase cash flow in your business. You may pursue this option if you currently have an adjustable-rate mortgage and market interest rates drop. Refinancing at a lower interest rate can save you money, but watch out for fees. Refinancing a loan always has fees associated with the transaction that may reduce or even negate a lot of the savings from the refinance. Working with a neighborhood banker can help you navigate the rates and fees for your best outcome.

Changing your loan terms

You can drastically reduce your monthly mortgage payments by extending the term of your loan. This, too, can increase your business’s cash flow. It’s important to consider the time it will take to break even with the closing costs & related fees.   Securing better terms may help provide greater stability by moving from an adjustable-rate loan to a fixed-rate loan if rates are on the rise.

If you are facing a balloon payment

At the beginning of your loan, your payments are smaller and help your business get off the ground. However, you might now be facing a rather large balloon payment. To avoid making this large payment, many business owners refinance their loans to maintain a schedule of more manageable payments over a longer-term.

Your business is growing/you need more space/your space needs to be remodeled/you want to build a new space or fit-out an existing space

Depending on where you are in the life of your commercial loan, you might have more equity in your property than you owe on your mortgage balance. You can leverage that equity with a cash-out refinance and use that cash to make improvements to your business. These improvements likely will lead to higher rent, enhanced business growth, and higher profitability thereby improving your business’s cash flow.

To ensure you get the best commercial real estate loan for you, work with a commercial lender who knows your business. Your specific business needs don’t fit into a typical template, and our bankers recognize that. Homewood Federal Savings Bank manually underwrites all of our commercial mortgage loans to account for factors unique to you. We make our decisions locally, and service our own loans from origination through refinancing through final payments. Enjoy the peace of mind that comes from knowing your banker is helping your business, and our community, to grow.