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*Update: As of April 18,2016, clients can refinance up to 85% of the home.

Long-term interest rates have been at near historic low levels for quite some time and thus, more people are looking for places to rent, making it easy to benefit from these investments. Your investment property loan may have terms that were very attractive when you first made the purchase, but due to changing market conditions may no longer be as favorable as they could be today. When interest rates fall, refinancing the mortgage on your investment property becomes very attractive because refinancing offers ways to leverage the equity in your property, lower your monthly payment and increase your cash flow.

Increase Your Cash Flow

You can drastically increase your cash flow by refinancing the mortgage on your investment property. If you’ve built up considerable equity in the property, you could turn that equity into cash by doing a cash-out refinance. If you refinance to a lower rate and/or increase the term of your loan, that could also lower your monthly mortgage payment and increase your cash flow even more. Using the Quicken Loans Rate and Payment Calculator can help you find out how much equity you have to borrow against and give you suggestions on what loan may work best for you.

Upgrade Your Property and Raise the Rent

The home equity in your investment property can be used to fund improvements to your property and boost your cash flow. The great benefit of refinancing and making home improvements to your investment property is that it increases its market value, thereby allowing you to increase the amount of rent you charge to your tenants. With a cash-out refinance, you could:

  • Build an addition to increase living space
  • Upgrade the floors, doors, kitchen appliances and cabinetry
  • Remodel the bathroom(s) with nicer fixtures
  • Upgrade the furnace or central air
  • Replace the roof
  • Paint or re-side the house to enhance the exterior appearance

Buy An Additional Investment Property

You can use a cash-out refinance out of your investment property to invest further in real estate. Equity in your property increases each year as the mortgage loan is paid down. Any increase in the value of the property will increase your equity in addition to the principal paid. To capitalize on that return, you can tap into that added equity, turn it into cash by refinancing and then apply it toward funding further investment properties. A Quicken Loans home loan expert can help you determine how to use a home equity loan to finance other properties.

Spend Your Money in Other Ways

The opportunity to use equity you have earned in your investment property is a major benefit of home ownership. The beauty is that you can refinance and convert the home equity into cash and then use it for whatever you choose. Making improvements to your property or purchasing additional investment properties are good examples of how refinancing can work to your advantage. The cash from your home equity can also be used to:

  • Boost your retirement savings
  • Invest in stocks or other markets
  • Take the vacation of your dreams
  • Buy a new car or boat
  • Consolidate debt
  • Help fund your children’s college tuition

Cash-out refinances provide an easy source of cash and can be a valuable tool for those who invest in real estate. Using the equity in your investment property can help you increase your investment power and increase your long-term wealth. A Quicken Loans home loan expert can help you determine which refinancing options are best for you. Call us at (800) 251-9080 to speak with home loan expert or fill out our short application online and a home loan expert will contact you.

This Post Has 5 Comments

  1. I simply want to see your rates and costs on refi of existing mortgage on an investment property. I have an 800+ credit score, year over year lease agreement, 25% equity and ready to roll. But all I ever see is for home buyers even when I look specifically for a investment loan. Looking for 30 year amortization with 5 year balloon or a 23 year loan on investment home. Also looking to refi my vacation condo (in rental program) if rates turn out favorably. Thanks!

    1. Hi Eric! I’ll have one of our licensed mortgage experts reach out to you with more information on rates and costs.

  2. My wife and I have three residential properties that are underwater, or, in other words, we owe more on them than they are currently worth.

    The interest rates range from 5.25% to 6 or 7%.

    Some have fixed interest rates and some have variable rates..

    Some of them require interest and principal payments, and some require interest only payments.

    Some only have one mortgage against the properties, and some of them have a mortgage against the property and line of credit against the properties..

    Can we refinance these properties and secure more favorable terms?

    We certainly look forward to working with Quicken.

    Thank you…

    Richard S.

    1. Hi Richard, thank you for telling us about your situation. I’ve shared your inquiry with one of our home loan experts who will contact you to see if we may be of assistance. Thanks, and have a great day!

  3. […] pretty easy to do. What you need to do is, instead of selling the current house you are living in, refinance it . Use that money to put the down payment on the next house you intend to buy, and turn the first […]

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