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Generally speaking, refinancing offers successful investors an opportunity to expand or improve their portfolio. The best time to consider refinancing a rental property is when the value of the property is high and interests are low as this will allow you to negotiate favorable terms.
A few of the most common reasons that investors choose to refinance their investment property or properties are:
Currently, interest rates are relatively low for real estate investors. Even if they rise slightly, they are forecast to remain favorable compared to historic rates.
Tracking interest rates will help minimize costs when investing in a rental properties.
Money gained from refinancing can be used towards a downpayment on another investment property. This is considered a cash-out refinance when you take out a value against your mortgage to pay for something else.
Perhaps your current mortgage is 30 years long and you want to reduce that. Along with making your interest payments more predictable, switching to a fixed-rate loan lowers your overall monthly payments and interest rates. You may even be able to reduce your loan term significantly. You could reduce your mortgage from 30 years to 15 years, or from 20 years down to 10 years.
Renovating a home can add tremendous value, but first, you need the money to do so. By refinancing, you can have access to more money to renovate. This is another example of cash-out refinancing.
Whether your strategy includes something like cash-out refinancing or you’re getting a new separate mortgage, having accurate and complete financial records is vital if you want to be able to secure good financing options.
With Landlord Studio you can easily track income and expenses, as well as automate admin tasks, collect rent payments, manage tenant communications, and instantly generate a range of professional reports.
You can get all the data you need to prove the dependability of your property’s rental income from the Landlord Studio software.
You may need several additional documents such as a credit report and your recent personal tax return to qualify for refinancing. You can learn more about the documents you need for your mortgage here.