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Investment Real Estate Refinance Rate & Term/Cash Out Mortgage Loans

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    When refinancing a mortgage, essentially, you have two choices. If you refinance your existing loan to get a lower interest rate or change the terms, it is called a rate-and-term refinance. If you want to extract some of the equity in your home—perhaps to do a renovation, pay down debts, or help pay college costs—you may take a cash-out loan.

    But it’s important to understand how these two refinance options can affect your financial position.

    KEY TAKEAWAYS

    • The basic options when refinancing a mortgage are a cash-out, or rate-and-term refinance.
    • You can extract some of the equity in your home with a cash-out refi.
      In a rate-and-term refinance, you exchange the current loan for one with better terms.
    • Cash-out loans generally come with added fees, points, or a higher interest rate, because they carry a greater risk to the lender.
    • It may be possible to extract some cash from your refinance without incurring the extra fees of a cash-out loan by taking advantage of the overlap of funds at the end of one loan and the beginning of another.

    An Investment Property Refinance Can Make Your Loan More Manageable and Give You the Cash You Need to Improve Your Tenant’s Space. Here’s A Quick How-To Guide.

    Refinance an Investment Property: The Advantages

    Refinancing Your Investment Property Gives You a Number of Advantages. Here Are Some of The Reasons Why You Might Want to Refinance Your Investment Property.

    Lower the Refinance Rates for Your Investment Property

    You Might Be Surprised by The Difference Between an Investment Property and A Primary Property’s Interest Rate. Typically, The Interest Rate for An Investment Property Runs At Least 0.5% – 0.75% Higher Than What the Same Borrower Might Pay for A Mortgage on Their Primary Residence.

    Investment Properties Represent a Larger Risk for Lenders. Banks and Online Lenders Know That If You Run into Financial Hardship and Can Only Afford a Single Mortgage Payment, You’ll Always Choose Your Personal Home.

    To Account for This Risk, Lenders Charge More in Interest on Investment Properties. Two Mortgage Payments Can Be Unsustainable, So You Might Want to Search for A Lower Rate by Refinancing.

    Refinancing Can Give You Access to Lower Rates If You Can Show That You Are Successfully Managing Your Rental Property. Compare Your Current Interest Rate with Offers from Lenders Before You Refinance.

    Change the Mortgage Term.

    Have You Thought About Changing Your Investment Property’s Loan Terms So You Own Your Investment Property Free and Clear Sooner? You Pay More Each Month, But You Accrue Less Interest Over Time When You Shorten Your Loan’s Term.

    You May Also Be Able to Refinance from An Adjustable-Rate Mortgage to A Fixed-Rate Mortgage. Investment Property Owners Often Choose to Switch to A Fixed Interest Rate Because Their Rates Don’t Change on A Month-To-Month Basis, Which Gives You a More Consistent Set of Monthly Expenses.

    Cash-Out Equity

    Until Your Mortgage Balance Is Zero, You Don’t Technically Own Your Home Free and Clear. Your Lender Keeps a Lien on The Property Until You Pay Back Your Mortgage. A Lien Means That Your Lender May Seize the Property If You Don’t Pay Back What You Borrowed. This System Is the Same Whether You Own Personal Property or Investment Property.

    Increase Your Rental Income

    Are You Getting the Most Rent Possible Out of Your Investment Property? Refinancing to Make A Few Improvements or Repairs Might Allow You to Rent the Property Out for More Money. Some of The Most Common Upgrades You Can Make to Increase Your Cash Flow Include:

    • Adding an Additional Segment to The Home to Increase Living Space
    • Finishing A Basement and Renting It Out as A Separate Apartment
    • Replacing the Roof and Missing Tiles
    • Upgrading the Major Appliances, Cabinets and Floors
    • Repainting the Interior Rooms to Make the Property Look Nicer
    • Finishing or Maintaining an Outdoor Structure Like a Pool or Fence
    • Upgrading the Furnace or Central Cooling System

    Finance Other Real Estate Investments

    You May Want to Use Your Home Equity to Finance a Down Payment If You See a Real Estate Investment That You Need to Snatch Up Quickly. As Your Home Grows in Value Over Time, Your Equity Increases in Value Beyond What You Pay on Your Principal.

    You Can Even Parlay This Built Equity into More Profit by Using It to Put Money Down on Another Investment. You Might Even Have Bigger Goals, Such as Using the Money You Get from Your Refinance to Invest in A Different Type of Real Estate Venture, Like A Commercial Property.

    The Process of Refinancing a Rental Property or Investment Property.

    Step 1: Build Equity

    Before You Can Refinance Your Investment Property, You’ll Need to Build Some Equity. Lenders Have Different Requirements for How Much Equity You Have to Have in Your Property Before You Can Refinance, But Many Want to See A Loan-To-Value Ratio That’s Lower Than 75%, Meaning You’d Need to Have At Least 25% Equity in Your Property.

    Step 2: Gather the Proper Documents

    • Proof of Income: You’ll Usually Have to Show the Lender Your Original Pay Stubs from The Last 30 Days. Your Lender May Ask for A Bank Statement or Another Form of Income Validation If You’re Self-Employed.
    • Copies of Your W-2 Or 1099 Forms: Lenders Require Your W-2s or 1099 Forms Because They Use Them to Verify Your Employment History and Your Income. Your Lender May Also Ask to See Your Full Tax Return If You’re Self-Employed, And Will Require This Information from Everyone You Include on The Loan.
    • Proof of Homeowners Insurance: This Shows the Lender That You Have Enough Coverage on The Property to Protect Your Investment.
    • Copy of Your Title Insurance: Your Title Insurance Helps Your Lender Verify That the Property Is Yours to Refinance. It Also Provides the Lender with A Legal Description of The Property and Information on Taxes.
    • Copies of Your Asset Information: Your Lender Will Want to See Your Assets, Including Bank Statements, Investment Account Information and Retirement Savings.

    Gather the Proper Documentation Before You Apply for Refinancing to Help Speed Up the Process. Keep More Than One Copy Available in Case You Need to Resend Any Documents.

    Step 3: Apply

    Refinancing Your Home Is Usually Less Complicated Than Buying a Home. Contact Your Lender and Begin the Application Process. Complete the Lender’s Application, Submit Your Documents and Respond to Any Inquiries Quickly.

    Step 4: Lock Your New, Refinanced Rate

    Once Your Lender Approves Your Application, You’ll Usually Have the Option to Lock Down Your Interest Rate. This Gives You Time to Read Your Refinancing Terms Without Worrying About Your Interest Rate Changing. Rate Locks May Last Between 15 And 60 Days, Depending on Your Lender. Your Location and Loan Type May Also Play a Role in How Long Your Rate Lock Lasts.

     

    If You’re Happy with The Rate You Get, Lock It in Through Your Lender As Soon As Possible. If Not, You Can “Float” Your Rate and Proceed with The Loan. If You Float, Keep in Mind That Your Rate May Either Go Up or Down, Depending on How Market Rates Change.

    Step 5: Underwriting

    An Appraisal Determines the Fair Market Value for A Home and Shows Your Lender That the Price You’ve Agreed to Pay for A Home Is Fair. Appraisals Are Also Often Used to Estimate Property Taxes. Make Sure Your Home Is Looking Its Best Before Your Appraiser Arrives. You May Also Want to Put Together a List of Upgrades You’ve Made to The Home Since You Moved In.

    Step 6: Closing

    After Underwriting Concludes, It’s Time to Close on Your New Loan. Closings for Refinances Happen More Quickly Than Home Purchases. At Least 3 Business Days Before Your Closing Meeting, Your Lender Gives You A Document Called A Closing Disclosure.

    Your Closing Disclosure Covers the Details of Your New Loan, As Well As Any Closing Costs or Fees You Need to Pay. At Your Closing, You’ll Sign All of Your Documents and Ask Any Last Questions You Have About Your Loan. If Your Lender Owes You Money, Such as During A Cash-Out Refinance, You’ll See It in Your Bank Account Within the Next Few Days.

    Contact Us :

    Address :- 1307 W 6th St #219, Corona, CA 92882
    Phone : (951) 963-9399
    Email : loans@happyinvestmentsinc.com

    FAQ

    What's a mortgage APR?

    Your annual percentage rate, or APR, is one of the many costs that comes with a mortgage. While your mortgage’s interest rate is the annual cost to borrow money (expressed as a percentage), your APR takes other fees and charges into account.

    Your APR includes the loan’s interest rate, any mortgage points you purchase, and lender and broker fees. Looking at your APR can give you a picture of the true cost of your mortgage.

    A mortgage’s APR is usually more than its interest rate.

    What are mortgage fees?

    Charging fees is one way that lenders make money off mortgage loans. Mortgage fees should be listed on your closing documents and may include the following:

    Origination fee
    Application/processing/administrative fee
    Underwriting fee
    Points fee
    Appraisal fee
    Inspection fee
    Attorney review fee
    Private mortgage insurance
    Homeowners insurance
    Title search or insurance fees
    Survey fee
    Prepayment penalty

    What are different types of mortgage loans?

    The most common type of mortgage loan is a conventional loan. Other types are backed by the Federal Housing Administration or are from a special program such as the Veterans Administration or the USDA.

    Most mortgages are conventional, meaning they’re not part of any specific government program — though they’re still subject to federal mortgage laws. Conventional loans typically cost less than FHA loans, but it may be harder to qualify for a conventional loan.

    The FHA regulates and insures FHA loans, and private lenders make the loans. FHA loans allow you to borrow with a lower down payment and generally with lower credit scores. But you may be limited on how much you can borrow through an FHA mortgage.

    Special home loan programs are tailored for certain groups. For example, VA loans are for veterans, military service members or surviving spouses, while USDA loans are for lower- or middle-income borrowers in rural areas.

    What documents do I need for a mortgage?

    Each lender will have its own requirements for what documents to submit when applying for a mortgage. But here’s the info you’ll generally need to provide.

    A month’s worth of paystubs
    W-2s for the past two years
    Your federal income tax return for the past two tax years
    Proof of income
    Recent bank statements
    Proof of your down payment amount, such as a savings account statement
    Documentation of a name change (if you’ve recently changed your name)
    Identification, such as a driver’s license
    Your Social Security number
    A certificate of housing counseling or home-buyer education (if you have one)

    Will mortgage rates go down?

    It depends — mortgage rates are generally influenced by the prime rate. Many banks base their prime rates on the federal funds rate, which is the rate banks charge each other for short-term loans. When the Federal Reserve changes the federal funds rate, mortgage interest rates can react and go up or down.

    But a lower (or higher) prime rate doesn’t necessarily determine the mortgage rate you’ll qualify for. Your credit scores, the type of loan you’re seeking, the price of your home and how much down payment you can afford can also affect your mortgage rate.

    Residential, Commercial, Small Business & Hard Money Loans

    If you are an investor, borrower or a broker trying to get Private Hard Money Loans let us help you by explaining all of your options, and assist you in making a fully informed decision. Happy Investments Inc overriding focus is in satisfying the diverse loan and investment needs of the customers with honesty and integrity, and we do this by consistently providing quality products tailored to their unique needs. For more information, give Happy Investments Inc a call at (951) 963-9399.

    Residential, Commercial, Small Business & Hard Money Loans

    If you are an investor, borrower or a broker trying to get Private Hard Money Loans let us help you by explaining all of your options, and assist you in making a fully informed decision. Happy Investments Inc overriding focus is in satisfying the diverse loan and investment needs of the customers with honesty and integrity, and we do this by consistently providing quality products tailored to their unique needs. For more information, give Happy Investments Inc a call at (951) 963-9399.

    Residential, Commercial, Small Business & Hard Money Loans

    If you are an investor, borrower or a broker trying to get Private Hard Money Loans let us help you by explaining all of your options, and assist you in making a fully informed decision. Happy Investments Inc overriding focus is in satisfying the diverse loan and investment needs of the customers with honesty and integrity, and we do this by consistently providing quality products tailored to their unique needs. For more information, give Happy Investments Inc a call at (951) 963-9399.

    Residential, Commercial, Small Business & Hard Money Loans

    If you are an investor, borrower or a broker trying to get Private Hard Money Loans let us help you by explaining all of your options, and assist you in making a fully informed decision. Happy Investments Inc overriding focus is in satisfying the diverse loan and investment needs of the customers with honesty and integrity, and we do this by consistently providing quality products tailored to their unique needs. For more information, give Happy Investments Inc a call at (951) 963-9399.