Q: Can I refinance an investment home?
A: It's certainly possible to refinance the mortgage on an investment home. However, the process and the paperwork you will need can be somewhat different than a refinance on a primary residence.
Usually, this hinges upon whether or not you need the income the property generates to cover the required mortgage payment, or whether your income without that cash flow can support the mortgage.
Proving rental income
If you need the income from the rental of the property to cover the cost of the mortgage, the lender will generally require you to provide rental histories, leases and any other supporting documents to show that the expected cash flow from the property is sufficient to qualify and also is likely to be consistent over time.
If the property isn't presently rented, you may be required to provide a local rental market analysis to show the lender current rents for properties like yours.
Not all lenders will apply
Please know that not all lenders will finance investment homes, or finance all kinds of investment homes.
Also, the rules will usually be different if the property is a condo or townhouse rather than a detached, single-family home. It's a good idea to talk to lenders who operate in the market where the property is located, too, since they will be more familiar with the current strengths and weaknesses in the local rental market.
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