Refinancing rentals and second homes, answered plainly
What changes when you refinance a rental?
Plain answer
Expect lenders to require more equity, more reserves and more documentation for an investment property, and expect pricing to reflect higher risk. The appraisal may include a rent schedule. Leases and tax returns show rental history. Owning several financed properties can add requirements.
Last reviewed against the primary sources listed below.
Documents to gather
- Current leases.
- The last tax returns with the rental schedule.
- Statements for all mortgages you hold.
- Insurance declarations for the property.
- Proof of reserves.
Appraisal
For single-unit rentals, appraisers can complete a comparable rent schedule to support market rent.
Landlords also ask
What is a property investment loan?
A mortgage on property held for income rather than as your residence. It usually has stricter terms than a home loan.
Is it ever a good idea to refinance a rental?
When it lowers total cost, improves cash flow or funds a sound plan after closing costs. Run the numbers for the time you expect to hold it.