A: In September 2019, we were given the opportunity to re-finance our building debt. Refinancing would save HMUMC hundreds of thousands of dollars in interest over the coming years. The Finance Committee voted unanimously to move forward with refinancing the existing building debt. Particularly noteworthy is that we reduced our principal by $1 million dollars from 2018-2019.

Six years later, we have reduced the principal by another $1 million which brings us down to $5 million. The congregation has done a great job! It is amazing that we have reduced the principal by $2 million, but we have also paid $2 million in interest.

Very wise decisions have been made, which puts us in a strong position to eliminate this debt.

Here is the timeline:

March 14, 2017 - Initial mortgage to fund the new sanctuary. The back required two notes instead of one to mitigate their risk by requiring $1.2 million to be paid down in three years.

Total $7.1 Million in Debt

Note 1 - $5.9 Million @ 3.65% interest rate on a 6-year term

Note 2 - $1.2 Million @ 3.75% interest rate on a 3-year term

March 1, 2019 - $500k required principal payment made.

September 2019 - Updated building fund balance = $379,965. The additional required principal payment due by March 2020 was $650,000.

November 2019 - Refinance $6.15 Million @ 3.77% on a fixed 10-year term - This was beneficial to the church as we were at historically low interest rates and preserving cash flow that proved essential to carry us through the pandemic. If we had not refinance, the interest rate in 2023 at renewal would have been 6.77%, and we would be paying an extra $100,000 per year in payments.

Total mortgage payment per year = $408,000 (roughly half principal and half interest)

A: The intent of the Mortgage Principal Reduction Fund is the same as the original intent of the Building Fund. The building campaign began with the goal of raising funds to be used for additional principal payments to reduce mortgage debt.

During the early stages of the campaign, the church was presented with an opportunity to refinance the mortgage at a significantly lower rate (3.7%). Given the financial challenges at the time, the finance team made the decision to take advantage of the refinance opportunity (which saved the church lots of money in interest) and place the financial gifts in the Building Fund into a restricted fund to help make the monthly mortgage payments.

While financial gifts given to the Building Fund were ultimately used to make mortgage payments, ALL gifts given to the (3-Year) Mortgage Principal Reduction Fund will be used to make additional payments to reduce the mortgage principal. The Leadership Board has decided that additional principal payments will be made monthly using all Mortgage Principal Fund gifts received the previous month and we are committed to openly communicating our progress to you monthly.