Cash Out Refinance to Buy Investment Property
Cash out refinance
Cash out refinance to buy investment property.
The combination of significant reductions in home prices and low interest rates makes now an attractive time to buy an investment property. Many investors are taking advantage of the current market to obtain a rental property or even several. If you own a home that you have established equity in in, you may find that your best option is to cash out refinance to purchase the investment property. Depending on how much equity you have, taking cash out will allow you to have the money to place a down payment on a loan or outright buy the new property.
Below are details of what you may be able to qualify for and how you may be able to approach cash out refinancing to purchase an investment property. The first step is to determine how much equity you have and how much you will need for your down payment.
The two most likely types of cash out loans that will provide the best loan for you are a conventional or FHA loan (unless you are a veteran or buying a property eligible for a USDA loan, which both offer 100% financing). Conventional cash out loans are ideal for those who can take out all the cash they need while staying under a 80% LTV. This is for the reason you can avoid paying mortgage insurance (PMI) by staying under 80%. If you need to take out more, an FHA loan allows up to 85% for the loan-to-value. This maximum LTV on FHA loans is the max any FHA lender offers.
To minimum down payment requirement for an investment property purchase is 15%. So if between the equity you can take out, and your current savings, if you can place 15% down you may qualify for an investment property mortgage. The other qualifying factors are credit, mortgage payment history, and other standard underwriting / approval loan conditions.
Another reason to consider us is if you are looking to take out a loan on the investment property. We can simultaneously process both the cash out refinance on your existing mortgage and the loan for the purchase of the second home. The way this would work is we would underwrite both loans and once your cash out mortgage is closed and funded we will subsequently close on the investment property.
We encourage you to shop around and compare our financing terms and rates to all other mortgage lenders. Our loan terms on both cash out refinances and investment property purchase loans are extremely competitive . The best way to receive more information and free quotes for both loans, contact us today via our form on this page. We look forward to hearing from you!