Increasing cash flow is always something that investors are thinking about, and one of the ways you can do this is by refinancing the mortgage on your rental property. Rates are about as low as they can go right now, so making some money moves is probably attractive.
We want to make sure you’re refinancing the right way and for the right reasons, so we’re talking about whether you should consider new loan terms in the current market.
Reasons to Refinance Your Rental Property Mortgage
One of the reasons you might want to refinance your investment home is to pay off the loan a little bit sooner. If you are thinking about getting out from under mortgage payments entirely, it might be a good idea to refinance into a loan with a shorter repayment term. You can go from a 30-year to a 15-year mortgage, for example, and the monthly payment won’t be all that much higher.
You might also have a mortgage rate that’s higher than it needs to be. If you obtained the loan with little collateral or a credit score that’s much lower than it is now, you should consider refinancing for a better interest rate. Not only will this save you in the amount you pay every month, you’ll also have a less expensive mortgage in the long term.
Keeping expenses as low as possible is the best way to maximize your cash flow and bring in more rental income every month. When refinancing makes sense, jump on the opportunity to save money and earn more on your investment property.
Expand Your Real Estate Portfolio: Cash Out Refinance Options
Depending on the equity you have in your rental property, you can also take advantage of a cash out refinance. In this situation, you will refinance your mortgage and take out any cash that you’ve earned as your property has appreciated and your mortgage has been paid down.
With that cash, you can buy another investment property. You can also use the money to make improvements to existing properties that will allow you to earn more either on the sales or the rental market. If you’re investing with partners, you can buy them out with your cash refinance proceeds and start thinking about how to build your own investment portfolio.
Considerations, Costs, and Qualifications
