The Going Rate

Question: Now that interest rates have come down, do you think it makes sense to refinance the mortgage that we took out to buy our company's building? We're currently paying 8 percent on a 15-year loan, and we still have six years left on it. 

Answer: Deciding whether to refinance your mortgage is more than an exercise in doing the math. While short-term interest rates have fallen dramatically since the Fed started cutting interest rates last fall, long-term rates remain relatively high. Though 15-year mortgages are currently hovering at about 6.2 percent for residential property, rates on office buildings are still above 7 percent. Even if you can get a better deal on your building's mortgage, you might face stiff prepayment penalties in addition to legal fees, title insurance and other closing costs. 

One way to get a lower rate is to "lock in" for a shorter term--say, five or 10 years--but there are risks involved in that strategy, too: If interest rates rise over the next few years, you might end up paying more than you would with your current mortgage. 

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Rosalind Resnick is the founder and CEO of Axxess Business Consulting, a New York City consulting firm that advises startups and small businesses, and author of Getting Rich Without Going Broke: How to Use Luck, Logic and Leverage to Build Your Own Successful Business. Reach her at rosalind@abcbizhelp.comor through her website, abcbizhelp.com.