Should We Be Worried That the Building's Mortgage Is Due to Be Refinanced Soon?

Aug. 20, 2015 — Our lawyer has told us that the building's mortgage only has two more years before it needs to be refinanced. Should we care about that?

It's imperative that all associations plan for the future accordingly and the mortgage payment is a part of the overall association plan. As an association comes within two years of the due date, it's important to weigh the prepayment penalties, if any, versus the available interest rates and financing options. It might make sense for a building to pay a prepayment penalty to lock in an interest rate to ensure long-term savings for the association.

The board has a responsibility to try to lower costs while improving the quality of life for its association. You never know what's going to happen in the market and paying a penalty might still lower your obligation in the long run. At the end of the current mortgage period, it's important to lock in with little impact to the annual budget.

Andy Ashwal is executive director at KW Property Management & Consulting.