Conventional loans are usually the first choice of investors, but there are additional loan products specifically designed for investors.
Types of Loans Available to Investors
PURCHASES - REFINANCES - CASH OUT REFINANCES
Benefits of Refinancing Your Rental
If you’re fortunate enough to find yourself with a significant amount of equity in an investment property, you may want to consider borrowing that equity through a cash out refinance. With a cash out refinance, your loan amount will be sufficient to pay off your current loan on the property and give you additional funds at closing that you can use for many different purposes. You can make improvements to the property, invest in another property, pay for college tuition, pay off other debts, etc. Ideally the cash flow from the property will be enough to make the higher payment, but even if it doesn’t, your regular income can supplement to help you qualify.
We offer conventional loans for cash out refinances up to 10 financed properties, and if you’re over that limit, or perhaps you don’t meet the credit and reserve requirements for a conventional loan, we have other options available.
Learn more about cash out refinances.
If rates have decreased since you took out your mortgage, it may be a smart move to refinance and save money on interest each month.
If you purchased a property with money borrowed from friends, family, a private investor or hard money lender, or even the seller, you may need to refinance to pay off your initial purchase loan.
If you purchased with cash or funds from your home equity line of credit to secure the deal, you can get your cash back within the first 6 months with “delayed financing.”
If you have an adjustable rate mortgage and want to change to a fixed rate while they’re still at historic lows, a refinance will allow you to lock in a long term fixed rate.
If you took out a 15 year loan and now the payment is too high to handle comfortably, you can refinance into a longer term loan to spread payments out. If you took out a 30 year loan, you could switch to a 15 year and pay your loan off sooner. Refinancing to a shorter term has an added advantage – 15 year loans often carry lower interest rates than 30 year loans.
Whether you’re going through a divorce, no longer want to invest with a partner, or want to buy out a family member, you’ll have to refinance in order to remove someone’s name from a loan. This is the only way for them to no longer be obligated for the debt. Perhaps someone co-signed for you and now you can qualify on your own, and they would like to be free from the loan obligation. You would pay off the old loan and take a new loan out in your name only through a refinance.
Ideally you will get the same or better interest rate when refinancing, but what if you’ve also paid down a significant portion of your balance, and the property just doesn’t cash flow as much as you’d like? If you’re stuck with a higher payment, you can refinance to a 30 year loan again with a lower payment. Since your principal balance is lower, your payment will be lower as well, giving you the cash flow you need to keep your investment working for you.
Your DTI is not a static number - it will adjust up or down based on a number of factors.
Learn why disputing accounts will not get you very far with your mortgage approval.
It's important to realize that your interest rate affects how big of a mortgage you will qualify for.