If you own investment property, your aim is likely to make a profit, right? Or, at least, not to lose money each month whether you rent your property on a monthly basis or have a seasonal vacation rental. One of the best ways to decrease your monthly mortgage on your investment property and boost your profit each month is to refinance your mortgage at a lower interest rate.
With the rebounding housing market across the country and a hot rental market in many areas of the nation, lower interest rates coupled with higher rental rates could result in you having that investment property paid off before you know it. But, is it even possible to refinance a rental or investment property that you don’t live in? The answer is yes!
How can I refi my investment or rental property?
Many lenders have tightened their rules for refinancing the mortgages of properties which are not used by the mortgage-holder as a primary residence because the risk to a lender is higher that you may default on the loan for a property that you don’t live in. The risk amount is a tolerable one for many lenders though, but because not all lenders will offer refinances on investment properties it is likely in your best interest to gather several rate quotes to compare before jumping into a new mortgage loan.
What requirements are typical of refi’s for rental or investment properties?
Unlike your primary residence mortgage, a lender who is willing to refinance an investment or rental property may require that you have at least 6 months worth of mortgage payments as liquid assets in the event that your renter defaults on their rent or you are unable to rent out your property as planned. Landers may also insist on higher loan-to-value ratios for mortgages on investment properties.
Even though it is likely to be more difficult to refinance the mortgage on your investment or rental property than it would be to refinance the mortgage on your primary residence, depending on your current interest rate and loan terms it may be worth the added “hassle” in the long run. Even a small decrease in interest rates or a refinance to a shorter loan term can save you thousands or more over the life of your mortgage loan. We recommend reaching out to local lenders and comparing rates available on investment or rental property refinances before you move forward with any single lender.