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There are several things to consider when evaluating your refinancing options.

Is the new rate low enough to offset the costs associated with refinancing? Oftentimes these costs cause borrowers to stay with their existing lender and renegotiate the terms, rather than move to a new lender. How long is the period before the new interest rate will be re-set? If you plan to have the debt paid off early, perhaps through a capital campaign or other means of making prepayments, that may sufficiently offset the risk that the rate could be higher on the re-set date.

Are there any limitations on your ability to refinance your existing debt? Many parishes in the Archdiocese have considered refinancing only to discover that their existing loan has substantial prepayment penalties that make any refinancing uneconomical. In these cases, even at a much lower interest rate, the penalties could cost you more than the savings! There may also be timing restrictions that could limit when the old debt can be paid off.

CFC can help you evaluate the economics of a proposed refinancing. In some cases, our analysis may confirm the benefits of a refinancing and can help quantify the lower interest payments and/or restructured payments. In other cases, that analysis may show parishes that a refinancing will not translate into real savings.

Points to Consider When Refinancing