Alabama town refinances loan, halves amortization schedule
October 18, 2011
The town of Pike Road, Alabama, recently refinanced the $3.5 million loan for its town center, significantly decreasing its interest and amortization rates, according to the Montgomery Adviser.
The loan was moved from the First National Bank of Crestview to Branch Banking & Trust, reducing its interest rate from 6.43 percent to 3.8 percent while the original 40-year amortization schedule was cut in half.
"It's a major improvement," said Buddy Garland, Pike Road planning director, as quoted by the news source. "It allows us to pay less interest and gain more equity in the property as we go along, which is an enhancement for the financial statement for the town."
The decision to refinance was made by the town council, and will allow more than $662,000 to be paid down in five years - a sharp increase from the $134,862 that would have been paid under the old agreement.
Elsewhere in the country, Fitch Ratings affirmed the Connecticut town of Groton's bonds at AA last month, citing its "manageable debt burden ... characterized by rapid amortization."