Updated: Dec 23, 2020
Savvy investors examine their assets regularly, extracting use from investment properties from stem to stern. Such is the never-ending quest to identify and create unique methods to increase the return on their investment. https://www.fortunebuilders.com/refinance-your-rental-property/
Refinancing real estate is not restricted to a primary residence; investment properties can and should be refinanced when circumstances are favorable. The new year is ripe with reason to refinance your rental property. Refinancing now will empower investors in both the short and long term. Here are five reasons to refinance your rental property in 2020:
Reduce interest rates & monthly payments
Interest rates are much lower today than when most properties were purchased. Interest rates remain historically low, even though they are on the rise. Staying current with respect to rising and falling interest rates is vital to a your success as an investor. https://www.stessa.com/mortgages/. The time is now to take advantage of a financial industry that is leaning heavily in favor of borrowers and re-financers. Once rates climb and return to previous levels, the leverage property owners have before them today will no longer be available.
Improve loan terms
Re-financing from a variable to a fixed interest rate is typically underused and underappreciated when considering a refinance. While lowering the interest rate is almost always the primary goal, shedding a variable rate and establishing a fixed rate is the more important strategy to consider. This has the effect of stabilizing your loan, simultaneously decreases your monthly payment and decreases the interest due over the term of the loan. As an additional bonus, depending on the program, you can even reduce the term of the loan 30 to 15 years or from 20 to 10 years. Accomplishing all 3 of these goals in one refinance is a move only the shrewdest of investors accomplish.
Many loans carry Private Mortgage Insurance (PMI) since a minimal down payment was used at the time of purchase. At the time of refinance, the loan-to-value of the home will decrease below the customary 80.00% threshold, obviating the need for PMI and reducing the monthly payment.
Purchase Another Investment Property:
A cash-out refinance makes the equity in the property available to the investor for various important uses. Primary among them are the purchase of another investment property. https://www.fortunebuilders.com/refinance-your-rental-property/