Refinancing A Rental

: Chris Lee Law Firm

  Filed under: Refinancing

refinancingOwning an investment property has some additional considerations that traditional property owners don’t face. For one, obtaining foreclosure help on an investment property can be near impossible in some situations. Even options like refinancing come with some stipulations and challenges that must be met before an refinancing offer is approved.

Investing In Lower Rates

High interest rate on an investment property can almost be more risky than on a traditional mortgage. Since the property is generally not a single residence, but is often a multifamily unit the risks of defaulted rent payments are higher. Even a single renter failing to make rent can put considerable financial pressure on the property owner. Refinancing the property to a lower interest rate can put a bigger gap in between reliance on the rent for financial stability. However, the following issues should be considered:

Is there equity in the property? If not, refinancing may not be possible with strict lending requirements.

Is the property located in a high foreclosure, or at risk area? If so, the lender may not be willing to refinance on a property in such an area.

Are there any liens on the property? If the investor has not kept up with tax payments or has liens on the property a lender is not likely to approve a refinancing offer.

Are the closing costs affordable? If the investor cannot afford the out of pocket costs of refinancing, it may only cause further financial problems.

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