How to Refinance Your Mortgage to Buy an Investment Property
If you have been watching the real estate market for any length of time, you know that investing in real estate can provide you with excellent returns. Home values have been rising dramatically over the last few years and that is a trend that is not expected to end anytime soon. But purchasing an investment property does require a significant outlay of cash. So how do you afford a down payment if you don’t have that kind of money just sitting in your bank account?
One option is to refinance your current mortgage.
What is refinancing?
Refinancing is when you break your mortgage and get another one. Homeowners often do this when interest rates drop so that they can save money, but you can also use it as a strategy to take equity out of your home.
Refinancing to fund a down payment on an investment property
When you refinance, the minimum amount that you can refinance for is what you owe on your current mortgage – but additionally, you can also borrow up to 80% of your home equity and receive that in cash.
So if you have $200,000 in home equity, when you refinance, you could borrow up to $160,000 – which should be more than enough to make a healthy down payment on an investment property.
How to get started
If you are interested in purchasing an investment property and are considering using refinancing to fund your down payment, your first step should be to contact your mortgage broker.
Your mortgage broker can help you with both your mortgage refinance as well as your mortgage on the investment property.
As property values have skyrocketed over the past few years, your broker will likely recommend that you have the value of your current property assessed. It is probably worth more than you think which means you can potentially borrow a larger amount for a down payment on an investment property than you think.
Is real estate investing for you?
Although it is possible to make good money on real estate investing, it is not right for everyone. Part of the value that your mortgage broker will provide is to help you determine what you can afford and to help you with strategies for success.
Want to learn more?
If you are ready to take the next step as a real estate investor, we can help. Contact 1Onefund Financial today to speak with one of our brokers.