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3/8/12 at 11:35 AM 1 Comments

Save cash or pay down debt?

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If your church has cash leftover after expenses, you may be thinking about paying down your mortgage. But there are other options that may be better.

In today's lending environment underwriters tend to be more interested in cash balances than loan to value of a building. In most cases it would be better for a church to hold on to their cash and move balances over to the lender at closing.

Lenders look at cash balances as a safety net the church can rely on if giving drops or unexpected expenses arise. The church can pay down its mortgage after closing if cash balances remain comfortable.

A church should have a minimum of 3 months worth of expenses in savings. It is a good idea to keep these funds in an interest bearing savings account separate from the operating account so the church is not tempted to use these funds.

By John Berardino, Sr. Vice President, Griffin Capital Funding

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