Is Refinancing my Coop with Fixed Rate a Good Idea compared to a balloon mortgage?
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[{"id": "grwhgsk", "text": "Perpetual balloon and refinance is how it works in commercial real estate.\n\nCan you refinance it as 10/20 at the same current loan balance? That should keep payments the same and show actual progress towards paying it off. Would the bank offering the mortgage offer a $200k line of credit as well that will come up for balloon payment at the same time as the mortgage so both can be refinanced together in 10 years?\n\nContact 5-7 other banks that do lending on these kinds of NYC coops. Hope for 1-2 quotes so that you can compare across a couple lenders. If there are significant differences between them, then maybe it is worth engaging a mortgage broker. If they are all basically the same, then it is unlikely that a broker would offer much value.", "replies": [{"id": "gry3ujy", "text": "Great idea to inquire about 10/20 - thanks! Im trying to decide between the below options. I think your sugguesion about 200k line or credit is effectively the \"sugguested new\" option below where we borrow more than the current balance of 0.84M. That seems like a good option since it the monthly savings can be used to cover refinance fees and we will have some 150k in reserve should the roof have issues or something else happen. The other compelling options are listed below. \n\nGuess I need to ask others about their long term interest in gaining more equity as that would be a reason to go with a 10/20. Also depends how much we have in reserve already, which I need to inquire about. But im leaning toward alternative 2 or 3 and a line of credit.\n\nSincerely appreciate the help!\n\nCurrent:                  1M 10/30 @ 5.37% -&gt; 5,597 $/mo\n\nNew:                        1M 10/30 @ 3.40% -&gt; 4,435 $/mo\n\nAlternative 1:         1M 10/20 @ 3.40% -&gt; 5,748 $/mo\n\nAlternative 2:   0.84M 10/30 @ 4.20% -&gt; 4,108 $/mo\n\nAlternative 3:   0.84M 10/20 @ 4.20% -&gt; 5,180 $/mo", "replies": [{"id": "gry9lm2", "text": "The difference between a line of credit and borrowing more than the current balance is that you don't pay interest on a line of credit if you never use it. If you borrow more than the current balance, then you are paying interest to have that $150k in reserve \"just in case\".\n\nThere should be a reserve study or similar that goes over not only how much you have in reserve already but anticipated needs for the reserves (e.g. roofs might last 20 or 30 years. Is the roof up for replacement over the next ten years or can you wait and worry about it next time your loan is refinanced?)", "replies": [{"id": "grygagt", "text": "Understood 100%. Sincerely appreciate it!", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "grxgdcm", "text": "You can get almost any structure you want. Hire a broker. You should be able to get some longer term, full AM options with an LOC. Especially in NYC at what seems like extremely low leverage.", "replies": [{"id": "gry49r0", "text": "That would be great. Do you know if typically they offer a higher interest LOC if you have a full AM option relative to if you have a balloon? Or should the LOC be the same?", "replies": [{"id": "grz6ygo", "text": "Your rate on the full am piece is going to be wider than your 10/30 balloon. I\u2019m not sure how LOC rates would be affected. Longer term means higher rates all things being equal, especially with the yield curve steepening like it has.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}]