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Can I refinance an investment home?

By   |  Posted in Ask The Expert

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 mortgage 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.

About the author:
A 25-year expert observer of the mortgage and consumer debt markets, Keith Gumbinger has been cited in thousands of articles covering a wide range of consumer finance and economic topics in outlets ranging from the Wall Street Journal to the Bottom Line newsletters. He has been a featured guest on national broadcasts for CNN, CNBC, ABC, CBS and NBC television networks and has been heard on NPR and other national and local radio programs. Keith is the primary researcher and writer for HSH.com's MarketTrends newsletter and has authored or co-authored a number of consumer guides on mortgages, home equity, refinancing and more.

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