Financing in 20707>Question Details

Michelle, Home Buyer in 20707

Refinancing on rental property

Asked by Michelle, 20707 Mon May 16, 2011

We are renting out our condo (It was forced to become a rental property as its mortgage is higher than sale value at the moment. We are waiting for the market to improve then we will sell it). I hear that a rental property can not be refinanced. Even if you can, the interest rate is much higher than if it is a primary residence. Is that right?
Thank you.

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Shop around for a mortgage broker that can advice you based on your personal financial status, debts, credit history and employment history. Choose one that can answer all your questions in the first meeting and give you at least two financial options, if you qualify.

Best of Luck,

Maria Cipollone

Century 21 Tenace

http://www.Flahomespecialist.com
1 vote Thank Flag Link Tue Dec 11, 2012
Hi Michelle,

Hopefully, the value has returned and if you need assistance in selling I am available.
0 votes Thank Flag Link Sat Apr 27, 2013
I was speaking to a lender last week about this same topic - he said that people can still get a low interest rate for their investment properties but the requirement for a down payment is higher since there isn't mortgage insurance available for investment properties.

I'm not a lender so I would strongly suggest speaking to a few to weigh your options and make sure you have are well educated in how you move forward with your investment. If you are interested in refinancing and would like to get more information from the lender I spoke to, let me know and I'll get that information over to you!

Happy Holidays!!
0 votes Thank Flag Link Wed Dec 12, 2012
Yes, like Brent says, a lot of lenders will cap investment properties on that program to lower than 125%. 105-110% isn't uncommon. If your loan is owned by Fannie or Freddie, I would contact your existing lender as well as a couple new ones to see what type of options you'd have.
0 votes Thank Flag Link Mon May 16, 2011
Shane nailed it for you. I was typing almost the same answer but then figured why make you read the same thing twice. Only thing is I would say you would be capped at more in the range of 110%. My first call if I were you would be to your current lender. Use the links Shane gave you. If those don't work you can try
http://www.fanniemae.com/loanlookup/

https://ww3.freddiemac.com/corporate/

It's still best to call as they are only updated once a quarter. I've seen them be wrong before. The rates are still low though even on an investment property. Hope this help and let us know if you need more.
0 votes Thank Flag Link Mon May 16, 2011
You are correct that the interest rate on an investment/rental property is higher than those on a primary residence. The same rate costs 1.75 (up to 75% LTV) to 3 (75.01-80% LTV) points, that is the primary difference.

But you can definitely refinance an investment/rental property, it's similar to qualifying for a primary residence refinance but the requirements are a bit more strict in terms of credit, debt ratios, and you need to have 6 months of the PITI payment in reserves.

To refinance YOUR rental property which appears to owe more than it's worth, you would need to have your loan owned by Fannie Mae or Freddie Mac (check at http://www.makinghomeaffordable.gov/get-assistance/loan-look…) and then you could theoretically refinance up to 125% loan-to-value.
0 votes Thank Flag Link Mon May 16, 2011
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