Ask an Expert: Is now a good time to refinance a co-op?

My lease requires that I buy renter’s insurance, or risk being in breach. I don’t own anything of significant value, and would prefer to just pay for damage as it comes up. I realize this doesn’t provide liability coverage, but that’s a risk I’m willing to take in lieu of paying $206 a year. Can my landlord really make me buy a policy?

For a co-op thinking of refinancing, now’s the time to pull the trigger, say our experts.

“If you can save money year over year by taking advantage of the low interest rate environment — and this savings outweighs the co-op’s prepayment penalty — the answer is yes, definitely refinance,” says Mindy Goldstein, senior vice president at the mortgage lender National Cooperative Bank. “Especially if you can take out money for capital improvements,” she adds.

“Given today’s historically low rates, especially for co-op loans, many co-ops are reviewing the economics of a refinance,” notes real estate attorney Dean Roberts of Norris, McLaughlin & Marcus, who calls the decision “a fairly straightforward mathematical equation.”

While your pre-payment penalty is likely to be steep, if the savings from your lower rates over time (generally around 10 years) will outweigh the cost of the penalty, Roberts says, than refinancing is probably a good idea. “Most times it does make financial sense if the difference between the current interest rate and the new loan interest rate is substantial.”

In particular, if the building has capital needs or other issues that require extra funding (and it sounds like yours does), you should absolutely use these low rates to your advantage. “If you were going to look for funding anyway, this is a very good time to be doing it,” says Roberts. Provided your co-op can get a rate that’s significantly better than the one you have now, get that new financing while the getting’s good.

Virginia Smith is an associate editor at BrickUnderground.com, the online survival guide to finding a NYC apartment and living happily ever after. To see more expert answers or to ask a real estate question, click here.