Tips to Refinance a Rental Property

Chances are, if you're paying on a mortgage for a rental property, you've probably at least heard of its refinancing. Refinancing a rental property means that you are paying by opening another mortgage. You are basically switching from one mortgage to another. This may seem counterintuitive, but it has potential benefits. In this guide, we will discuss why you might choose to refinance a rental property, with tips and refinancing options on how to do it successfully- and easily.

Tips to Refinance a Rental Property

Common Reasons People Refinance Rental Property

While there can be many different reasons to refinance a rental property, some are more common than others:

Low interest rates

Often, under the right circumstances, you can get a lower mortgage interest rate when you refinance a rental property. Everyone can benefit from lower interest rates.

Make mortgage payments faster or give yourself more time

When you refinance a rental property, you can extend or shorten your payment term. For example, if you currently have 20 more years left on your mortgage, you can refinance on a 15-year mortgage with a lower interest rate. You can also refinance when you have only 10 years left to pay off another 15 or 30-year mortgage.

Reduce your monthly payments

If you refinance the rental property, you can reduce your monthly payments. If your interest rate is low, your monthly payments will be low. Also, if you extend your payment term, your monthly payments should be lower. This makes it easier to pay.

Use equity for other needs, desires or investments

Some people even refinance to take care of other things, such as:

Debt settlement

Taking care of college expenses

Buying a new investment property

Payment of their primary home mortgage

Payment for repairs to one or more properties