Why investment refinances cost more
Lenders see more risk in a property you don't live in. If money gets tight, owners tend to protect their own home first. To cover that risk, investment property loans usually carry higher pricing and stricter limits.
Extra pricing adjustments can apply for investment properties, so compare the full cost, not just the rate.
Pricing can also differ by the number of units and whether you are taking cash out. A loan consultant can show you how each factor affects your quote.
What lenders usually require
- More equity than on a primary home, often 20% to 25% or more
- Cash reserves, sometimes for each property you own
- Rental income documented with leases or your tax returns
- A solid credit score and a manageable debt-to-income ratio
How rental income is counted
Lenders don't usually count the full rent. They often use your tax returns, where your rental schedule shows income after expenses. For a newer rental, a signed lease and an appraiser's rent estimate may be used instead, often with a portion set aside for vacancy and upkeep.
Rate-and-term or cash out?
A rate-and-term refinance lowers your rate or changes your term without adding to the balance. A cash-out refinance lets you pull equity for repairs, another purchase or reserves. Cash-out limits on rentals are usually tighter, and the higher balance raises your payment, so run the cash-flow numbers first.
When it pays off
Compare your monthly cash flow before and after the refinance: rent minus the mortgage, taxes, insurance, HOA dues, repairs and vacancy. If the new loan improves that number, or funds something with a clear return, it can be worth it. Think about how long you plan to hold the property too.
- Confirm your landlord insurance is in place and current
- Gather leases, tax returns and statements for your other properties
- Ask about the full cost, including any pricing adjustments
Refinancing a rental with CapCenter
CapCenter finances investment properties for first mortgages. Ask your loan consultant which refinance options fit your property and whether ZERO Closing Costs applies (restrictions apply). You need a credit score of at least 620 for a CapCenter loan.
CapCenter's home equity loans aren't available on investment properties, so a cash-out refinance is the main way to tap a rental's equity with us.
