Mortgage Refinance Could Provide Cash To Business Owners
March 1, 2012
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In times of financial turmoil, cash-strapped business owners may
not consider the benefits refinancing can have on their
Although interest rates on 30-year fixed-rate loans have
recently increased marginally, after settling in at record lows for
the last three month, these sub-4 percent rates could be an
advantage for business owners who need more cash to run their
In a piece for Inc.com, real estate expert and author Charles
Farrell advocates for business owners conducting a mortgage refinance on
their homes in order to make their monthly payments as low as
possible. This way, if the economy continues its current malaise or
businesses start to struggle, its owner will have more financial
flexibility if necessary.
Farrell gives the example of a $400,000 mortgage that a mortgage
lender will offer either through a 30-year note at 3.85 percent
interest or 15 years at 3.25 percent. While the 15-year note
features less interest, a monthly payment would be $2,800, compared
to the $1,875 a business owner would owe over a 30-year period.
"Let's assume that the economy or your business hits a rough
patch, and your business requires a cash infusion," Farrell writes.
"One of the easiest ways to free up cash for the business is simply
to pay yourself less. … The lower your mortgage payment is, the
easier it is for you to reduce your pay to help keep the business
An experienced mortgage lender that has experience working with
both residential and property owners can help these borrowers to
achieve the best loan agreement for their needs. Lending agreements
may not be universally acceptable to all borrowers, so special care
should be afforded to all prospective buyers and owners.
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