How To Refinance Your Investment Property

You may already know that the interest rates for investment property are higher than those for housing. This means that you cannot base your expectations on a rate offer on what you now see floating for residential mortgages. Lenders are also much stricter when it comes to relationships with loan value for rental homes.

If you want to sell the property in the coming years, refinancing on a 30-year fixed loan is probably not best for you. Instead, it may be worth looking for alternative options, such as HARP or the FHA fixed line funding program, depending on your specific reviews. refinance investment property loan With low interest rates and more programs available, now is the time to investigate whether or not refinancing is right for you. Deciding to refinance rental housing investments is a great decision, take the time to find the best method for your needs.

The mortgage interest rate for investment property generally ranges from 50 to 87.5 basis points more than the rates in a primary home. For example, if current primary residence rates average 3%, you could expect to pay 3.5% to 3,875% for a 30-year refinancing of fixed income property. First, refinancing investment property generally only makes sense if you have the opportunity to guarantee significantly lower interest rates. Fortunately, the refinancing rates for investment property are currently at an all-time low, so there’s a good chance you can save.

Investors can have up to 10 homes at any time that are financed from one to four units by refinancing an investment property. If you are an investor with a large portfolio, you may have to pay some loans before you can qualify for a refinancing. If you have obtained a short-term loan with high interest rates to repair or buy a property, you can pay it with a rent refinancing loan. However, be careful with prepaid fines – many lenders include them in your loan terms.

Your loan / value ratio, this is the mortgage amount divided by the appraised value of the property, shows lenders how much capital you have in house. So if your investment property was valued at $ 200,000 and you had a mortgage for $ 100,000, your LTV would be 50% ($ 100,000 / $ 200,000). The higher your LTV index, the higher the risk that the lender appears (since there is not that much equity built up on your property) and thus the higher interest you can expect to pay. For investment property, most lenders only allow borrowers to have an LTV of 75% or a lower refinancing. However, keep in mind that LTV investment property requirements vary from lender to lender.

Read more about why investors want to refinance a rental property in their own portfolio here. Professional real estate investors often use cash withdrawal refinancing to remove accumulated equity from one property to buy the other, as well as to reduce monthly mortgage payments. The maximum debt / income ratio for a conventional loan on an investment property is 45%.