Should You Re-Finance Your Rental Property?

Tue, Sep 21, 2021 at 6:45PM

Whether or not you should re-finance your rental property is a complex decision. Some owners have traditional mortgages where refinancing would be a disaster.

Some Factors to Consider

How much money did you originally put down on the property and do you have at least 20% equity? To refinance an investment property most lenders will want you to have equity in excess of what is required to refinance a primary residence and you may be charges more interest etc.

Hidden fees are now also in play. Due to the Coronavirus affecting Fannie Mae and Freddy Mac as of September 2020 there is an additional somewhat hidden fee on all refinanced loans. This fee in affect ads .5 % to every loan amount. Hopefully some day this will pass as well as the Covid 19 situation. Unfortunately, rarely does the government like to give up a revenue stream.

Tips when re-financing

If you decide to go ahead with refinancing there is a way to at least defer some of the costs. Many property owners do it and most will choose to if they think of it. Not all loan officers will tell you up front that this is an option. Have the first payment moved from 60-90 days after you close on the new loan. You will have to pay the interest (ask your loan officer to explain) but the deferment will nearly cover the costs of the refinance.

Refinancing An Investment Property

It would take hundreds of pages to address every situation that affect a refinancing decision. Not to mention everyone’s individual life dynamics. Rest assured we are here and are aware of the complexities of owning a rental investment property. Being one of the areas’ finest property management companies we strive to be current on everything the effects the business. We hope you have benefitted from this and it helps your decision on whether to refinance your rental property.

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