Investing in real estate is a popular way to build wealth in the United States. Many people purchase homes and rent them out, earning income from the rent.

Most investors purchase rental properties with home loans. If you own an investment property, you may have a high interest rate, depending on when you took out the loan and your credit score. If you want to take advantage of today’s lower rates, you can 澳洲幸运5官方开奖结果体彩网:refinance your mortgage. However, the process to refinance an investment property is a bit different from refinancing yo🌸ur primary residence, and it requires some additional documentation.

Reasons to Refinance Your Investment Property

There a🅰re several scenarios in which it makes sense to refinance an investment property:

1. 𒆙You Can Lower the Inter𒀰est Rate on Your Mortgage

Depending on when you took out the h💞ome loan for your investment property, you could have ended up with a relatiܫvely high interest rate. For example, rates in 2018 neared 5% for 30-year fixed-rate mortgages. If your mortgage is older than that, then you could be paying an even higher rate.

That's in stark contrast to the rates that became available in 2020. In January 2021, the average rate for a 30-year fixed-rate loan hit a record low of just 2.65%, while the 15-year fixed was 2.16%. As of June 2025, the rates have climbed significantly, with the 30-year fixed rate at 6.85% and the average rate for a fixed-rate 15-year loan at 5.99%.

If you have good credit and refinance your mor𝔉tgage, then you💯 could potentially qualify for a lower rate than you have now and save thousands of dollars over the life of your loan. 

2. You Can Change Your Loan’s Terms

When you refinance a mortgage, you can choose new loan terms. For example, you could opt for a longer repayment period to get a lower monthly payment or a shorter one to pay the property off faster. Or, you could switch from an adjustable-rate mortgage to a fixed rate. That alone could make refinancing worth the effওort. 

3. You Can Get Cash to Use for Renovations or Other Pu𝔍rposes

If the investment property is worth more than you owe on it, then you can tap into that equity to pay for repairs and renovations, to purchase another investment property, or for any other purpose through a 澳洲幸运5官方开奖结果体彩网:cash-out refinance loan. 

With cash-out refinancing, you borrow against the equity you’ve built in the property, taking out a new loan forꦑ more than the balance on your current one. You then get the difference between the new mortgage and the old one in a lump sum. 

How to Refinance Investment Property Mortgages

Refinancing investment propertꦕies is a more intensive process than refinancing a primary residence. To refinance the home, you’ll need to follow these steps: 

1. Build Equity

You must have built some equity in the property before you can qualify for refinancing. Depending on the lender, you may need a 澳洲幸运5官方开奖结果体彩网:loan-to-value (LTV) ratio no higher than 75%. This means that you would have to have at least 25% equity in the property to refinance the loan.

For example, let’s say you own a property worth $250,000 and still owe $185,000 on the mortgage, giving you $65,000 in equity. Your LTV is 74%, and you h𒆙ave 26% in🍰 equity—falling within the requirements for refinancing. 

2. Collect Documentation

You’ll need a l🏅ittle more documentation to refinance an investment property than you would with an owner-occupied home. Youꦍ most likely will have to produce the following documents: 

• Recent W-2 forms or pay stubs.
• Your personal and business tax returns from the past two tax years.
• Rental income information, including an Internal Revenue Service form.
• Current lease agreements for the property.

3. Check Your Debt-to-Income (DTI) Ratio

Lenders typically require you to have a 澳洲幸运5官方开奖结果体彩网:debt-to-income (DTI) ratio of 45% or less to refinance an investment property. If your DTI is ⛎over that threshold, then you can improve it by paying down so🍌me existing debt before you apply. 

4. Get an Appraisal

As part of the refinancing process, the 澳洲幸运5官方开奖结果体彩网:mortgage lender will require a professional property ෴appraisal to evaluate the home’s current value and rental incoꩲme potential. The appraisal will also determine whether the home has enough equity for refinancing. 

5. Save for Closing Costs

Just as you had to pay closing costs when you purchased the property, you’ll also have to pay them when you refinance. The average closing costs for a refinance are $5,000, but they can vary based on the loan size and the property's location. 

The Bottom Line

Refinancing an investment property can be beneficial if you get a lower interest rate and/or better terms on the loan. Rates and terms can vary, so it helps to get quotes from 澳洲幸运5官方开奖结果体彩网:multiple mortgage lenders.