How do you refinance a house
Can you refinance a house you rent out?
Real estate can be one of the best investments that you can make and as a result a lot of people own houses that they rent out. However the downturn in the economy has also meant that a lot of these people are having trouble making the payments on these houses. Therefore they often find it necessary to refinance the houses that they are renting out.
In most cases if you are renting your house out you will still be able to refinance it. There is really no difference between refinancing a house that you are renting and a house that you live in except the loan value ratio. However since this was also true when you bought the house it should not be a factor when you are looking to refinance. Other than that you will find that the process is the same as it would be for any other house.
When you take a mortgage for a house you are normally expected to put down twenty percent. However since most people can't afford that there are programs in place to allow you to buy a house with less money down. However this only applies to a house that you are living. For a house that you are renting you will need to have at least twenty percent to put down. Therefore if you want to refinance you will have to make sure
that you have at least that much equity in the house. This should not be an issue unless you are renting out a house that you told the bank you were going to live in. If this is the case you may find that you don't have enough equity to refinance.
One thing that you have to keep in mind when you are refinancing a house that you are renting is that the decision to refinance may involve different factors than it would for a house that you were living in. For example in most cases it is not a good idea to reduce the amount that you have to pay each month unless you have to. This is because it will end up costing you more in the long run. However with a rental property it might actually make sense if you are doing it to make sure that the amount that you receive in rent will cover the mortgage payment each month.
The other thing that you need to keep in mind if you are looking to refinance a house that you are renting is that you may find that you have to shop around for a lender a little bit more and pay a higher interest rate. The reason for this is that lenders consider that you are more likely to make your payments on a house that you are living and therefore consider it to be less risky.Source: www.refisite.net