by Ben Puckett, Finance Committee Chair
Our current mortgage was taken out in 2016 in the amount of $800,000 to provide financing for our $2.25 million expansion of the RE wing, offices, kitchen and gathering hall. (The remainder of funds was raised in a capital campaign.) Payments were interest only during the construction period, converting to an amortizing mortgage in Feb. of 2018. The balance has been paid down to $680,844 (as of August 31). The original terms called for an initial interest rate of 3.99% with a 25 year amortization period. The rate was to be ‘reset’ after 7 years based on prevailing interest rates (an index based on Treasury rates). Last year the rate was reset for an additional term of 7 years, still at 3.99%. Our monthly payment of principal and interest totals $4,347. These payments are included in WUU’s annual budget.
We have been fortunate to be in a low interest rate environment. In another 6 years (May 2027) we will have another reset of the rate. Based on current rates, the rate would increase to about 5.7% and the payment would increase to $4,800.
We have recently decided to reinstate monthly plate collections devoted to mortgage paydown. These ‘extra’ payments on the mortgage will reduce the balance further than would happen if only regular mortgage payments were made. This means that when the time comes to reset the rate in 2027, the payment needed to amortize the remainder of the loan at prevailing interest rates would also be lower. According to our current schedule, the mortgage will be paid off in March 2040.