Rather than refinance home mortgage payments, some people refinance the mortgages on their investment properties. This move offers a lot of the same benefits as when you refinance home mortgage payments, but there are some additional elements to consider. Before deciding to refinance, keep the following tips and ideas in mind.
What Are the Benefits of Refinancing Your Investment Property?
When you refinance home mortgage or investment mortgage, you typically receive a lower interest rate. That reduces your monthly payment, keeping more money in your pocket and boosting the return on your investment. Additionally, lower payments can also help you to pay off the mortgage sooner, and in fact, some people refinance to a mortgage with a shorter term so that they can get out of debt faster.
What Are the Best Refinance Loans for Investment Properties?
There are a variety of loans that can work perfectly if you want to refinance an investment property. If you have an adjustable rate, you may want to go for the predictability of a fixed-rate 30-year mortgage. Alternatively, if you want to shorten your term, you may want to opt for a 15-year mortgage. To secure a low interest rate and favorable terms, you can even check out FHA mortgages or VA loans. However, you can only use those loans if you live in your investment property, and usually, the property needs to be a fourplex or smaller.
What Do You Need to Refinance Your Investment Property?
In terms of paperwork, you need almost exactly the same documents that you need if you refinance home mortgage. That includes your ID, homeowner’s insurance, title insurance, information about your assets, and proof of income such as copies of your W-2 or old tax returns if you’re self-employed. However, for investment properties, you may also need to provide proof that you have commercial or residential renters in the property, and you may need to have the property assessed.
Should You Refinance Your Investment Property?
Not sure if you should refinance? Well, if interest rates have gone down since you purchased your property, that is a definite sign that you should think about refinancing. Similarly, if you want to change other elements of your loan such as the term, you may also want to refinance. In other cases, people refinance so they can take some equity out of the property. If you have equity currently wrapped up in an investment property and you want to reinvest those funds back into another investment property, you may want to refinance to make that possible.
Can You Refinance Home Mortgage for an Investment Property?
Sometimes, people even refinance their home mortgages so that they can buy an investment property. Again, this applies in situations where you have equity in your home. Then, you take out a new mortgage that lets you borrow against that equity, and you apply those funds to the down payment of your new investment property. Alternatively, you could use those funds to fix up an investment property.
When you decide to refinance, you should choose Bright Path Mortgage. We’re a no cost mortgage specialist, and we can find you the best mortgage for your needs. You can apply online today.