A refinance for a investment property is just like a mortgage refinance on your primary residence with only a few slight differences. When qualifying for a investment property mortgage refinance underwriters will look at monthly rental income and use that to figure the final debt to income ratios. To refinance an investment property you will need to have good to excellent credit.An investment property mortgage refinance will have a higher rate than an owner occupied mortgage refinance. This is because lenders see more risk of a default in a property that you are not living in.
There are programs out there that allow high loan-to-value ratios on an investment home. As an investor, this allows you to maximize your leverage by using Other Peoples's Money(OPM) and shift the risk to the bank rather onto you.
When refinancing investment properties, a lot of investors like to use a fixed rate mortgage program. This allows the investor to easily set a monthly budget due to a fixed monthly payment. In recent years, some investors have started to use adjustable rate mortgage programs for their investment property refinances. Some of these ARM programs have low start rates that allow for an increased monthly cash flow in the short term. This enables the investor to take the increased cash flow and re-invest it into more properties.
Investors also like the Adjustable rate Mortgages because they can create a positive cash flow position. This makes it easier to sell...especially if the mortgage is assumable.
Many times when you are using your rental income from your investment property to qualify for your investment property mortgage refinance you will have to show a lender or underwriter your actual 1040 forms. This will show the lender actual proof of whether you are actually making or losing money on the property.
