Refinancing of real estate for rent has become synonymous with many significant benefits. At the very least, it can unlock many opportunities for wealth building, including the ability to lower interest rates and monthly payments, improve loan conditions and generate additional cash flow. That said, too few new investors are aware that this strategy exists at all. Can you refinance a rental property?
When should I refinance my property for rent?
Now is a great time to consider refinancing a rented property. A lot has changed in a relatively short time. In particular, those who bought before the recession will most likely consider today’s rates to be significantly lower than at the time of the first purchase. In fact, the financial industry is now strongly in favor of borrowers and refinancing companies. Although interest rates are actually rising, they are still historically low. Today’s rates are much better than they were a few decades ago. Meanwhile, rates will continue to rise as the economy grows.
Good reasons for refinancing an investment property
There are two excellent reasons for refinancing a property for rent or investment:
- Lower mortgage rates or pay off loans faster
- Take advantage of refinancing withdrawals to buy new investment properties or improve your current one
You probably want to keep the investment property costs as low as possible. This is due to the risky nature of the potential lack of tenant sometimes.
So if you have the chance to lower your interest rate or lower your payments, you can take advantage of this opportunity.
In addition to the usual reduction in mortgage rates, there are other reasons for refinancing a property for rent or investment.
For example, you can execute a withdrawal request. This includes using equity and taking money out of real estate that you can put in your pocket when closed.
Now can be a great time to withdraw money so that you can buy another investment property. It beats taking money from the stock exchange or other financial investments. You can use the increased equity to buy more investment properties.
You can also use this payment money to improve your existing property for rent or investment. This can increase the value of your property and increase your return on equity or higher rent.
Choosing a lender
Reach several loan institutions or mortgage brokers and ask for a quote. Remember to get a quote from your current lender as he can give you better terms. You can request a quote from traditional lenders, online brokers or a private online lender such as RCN Capital.
Ask for rates for 15 and 30-year fixed mortgages, as well as for the various variable rate or ARM mortgages they offer. The lender will present general credit requirements and current mortgage rates.