4 Essential Tips to Refinance Your Investment Property with Ease

By Gabriel Knight

Just like residential properties, it’s possible to refinance your investment property as well. In fact a refinance is a suitable solution for people who struggle to manage the loan on their investment properties. Refinancing will help to keep the interest rate low and structure the investment property debt in a way to increase the chances of making profit.

4 Most effective tips that will help to refinance investment property

To acquire investment properties many investors depend on private lender financing. Well, private lenders may also turn out to be cooperative when it comes to refinancing investment properties. Most of the lenders have different guidelines for investment properties. The guidelines are considered to be a bit stricter in comparison to the traditional mortgages. Stricter guidelines reduce the risk factor for the lender. However, once you get acquainted with the specific guidelines, it won’t be that tough to refinance your investment property. Here are 4 effective tips that will help investors to make refinancing a successful and lucrative process:

1. Check your credit report before applying:

In private lender financing, experience of the investor matters a lot. If you’ve a good investing experience, then you may convince private lenders easily. However, the investors who’ve just started their journey may find it a bit difficult to convince the lenders. In such a circumstance your high credit score may rescue you. Normally, a credit score between 700 and 850 is considered safe. This helps the lenders to decide whether your investment property is a good credit risk or not. So, it’s better to check your credit report and learn about the FICO score before meeting with the lenders.

2. Evaluate loan-to-value ratio:

Apart from credit score, loan-to-value ratio is another essential financial information that lenders check before allowing borrowers to refinance. You can easily calculate the loan-to-value ratio. All you’ve to do is to divide the current mortgage balance by the recent value of the investment property. Lenders normally don’t lend on investment properties with more than 85% loan-to-value ratio. So, it’s essential to evaluate the loan-to-value ratio to get an idea about your financial standing.

3. Compare interest rates:

Loans on investment properties are secured by the recorded Deed of Trust. That’s why private lenders are capable of offering competitive interest rates. The rates are competitive in the general open market. So, before you zero in on any deal, make sure to check the rates well. If you’ve strong FICO score, low loan-to-value ratio and low debt-to-income ratio, then there are chances for you to get the most reasonable rates. With reasonable interest rates you’ll be able to increase the chance of making more profit in the real estate investment.

4. Look for shorter terms:

Private lenders offer numerous types of terms. They also offer shorter terms. These shorter terms are beneficial as they allow investors to secure the property without facing any prepayment penalty. Of course you must have enough resources to pay off the loan within the short period of time. Otherwise, refinance won’t be able to help you much.

These 4 tips will help a lot to find the most reasonable term and refinance investment property. Private lenders often make it easier to provide better access to the loans. Just because of this most of the investors find it safe to rely on private lender investing. Apart from this you must also take care of the monthly payments after refinance. If you’ve plans for cash-out refinance, then you should concentrate on increasing the monthly payments. The more you’ll pay per month the better it’ll be for your investment. The equity in property will grow and you’ll be able to make more profit.


This guest article submitted by:

Gabriel Knight
Real Estate and Mortgage Guest Blogger
Carson city, Nevada – 89701
United States
Direct Contact — 8167458174
Skype: gabriel.knight05
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