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  • Writer's pictureDr. Mark Lee Levine, Professor

Refinancing:  Is it Time to Refinance Your Loan? 




Interestingly, with all the talk in the news about interest rates dropping or about to drop, there is the concomitant discussion about refinancing existing mortgages or deeds of trust.

 

Commercial Loan Refinancing: 


In one recent blog and Newsletter, along with a major article, we discussed the huge concern today with defaulting loans or potential defaulting loans on commercial property, especially as to loans on office buildings.  We also recently completed a major article on some of the implications of these loans, should they move to the foreclosure level.  Part of the discussion in this longer article covered the issue of generating taxable income under the Federal Internal Revenue Code, Section 61, when such defaults occur.  For a discussion of this issue with much more detail, see the prior Levine Blog and Levine Newsletter.  The detailed article noted on this subject will be published very soon.  Look for this notice in the Levine Newsletter.  (If you wish a free copy of the article, simply send us an email, requesting the same.)  


Residential Loan Refinancing: 


Looking at the residential side of the refinancing equation, with few defaults on most of these mortgages, given that the residential market has generally gained in valuation over the last few years, there are remaining concerns when homeowners are considering whether they should, at this time, refinance their existing loan on their home. 

Recently I was asked this question as to refinancing and related issues. 


I commented on these issues in Money Geek.  Most of my comments related to the basic issues of trying to compare possible refinancing opportunities, such as the interest rate offered, Annual Percentage Rates (APR), additional costs, term of the loan, etc. 


For an examination of these and related points, see: https://www.moneygeek.com/mortgage/refinance/#expert=mark-levine-phd 

 

There are also additional, but related, issues on such refinancing of the residential mortgage.  One of these important issues is to discern the benefits of a conventional loan of different types or the considerations with a non-typical loan, such as financing what is owed or a loan to be carried or owed to the seller of the home.  Because of higher interest rates, and lower loan-to-value positions, alternative lenders in the market are being considered more often today than was true only a few years ago. 


On this issue, we also commented on such loans in the Money Geek. 



If interest rates move down this year, we can expect to see additional refinancing and the need to examine the related issues in such refinancing.  This relates mainly to residential loans. 


On commercial loans that require refinancing, it appears that obtaining sources for such refinancing will prove difficult for many owners of commercial property, especially those owners owning office buildings and other commercial property where the market value of the property in question has declined as compared to the valuation of only a year or two ago. 

 

Mark Lee Levine, Prof. University of Denver 

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