How Long Does It Take To Refinance an Investment or Rental Property?

The process to refinance an investment or rental property loan can appear daunting, but understanding the timeline, expectations, and requirements can make it easier. In this article we will go over the timeline for the process to refinance your investment or rental property and ways you can prepare.

How Long Does Refinancing Take?

In most cases, the process to refinance an investment or rental property should take between 30 and 45 days. The process will look similar to when you originally purchased your investment property but with a few tweaks. Here is what the general process to refinance your the property will look like.

  1. Get prequalified – Before you can refinance your investment or rental property, you’ll go through the pre-approval process to learn about the types of loans and rates available to you.
  2. Choose your loan – Now that you know your options, you’ll decide on the type of refinance, loan and terms you want to go with.
  3. Lock in your interest rate – A rate-lock is usually valid for 30-60 days, enough time to complete the underwriting process.
  4. Document processing – At this point you know the terms of the loan you are getting, so it’s time to start submitting required documentation to your lender.
  5. Final review and approval – Your lender will vet and process your loan application. If the documentation you’ve provided meets the underwriter’s requirements, you’ll be conditionally approved.
  6. Clear to close – This is when you’ll receive your final approval. In this phase you’ll receive a preliminary ‘Closing Disclosure’, a document that breaks down the costs of refinancing your mortgage. You’ll make final adjustments during this time.
  7. Closing day! – Finally, you will sit down with the title company and sign your closing documents. Before you arrive at the closing table, you will have gotten a cashier’s check or wired your final ‘Cash to Close’ amount.

Reasons to refinance your property.

If you are looking to refinance your investment or rental property, you’ll want to be sure you are coming out with a better deal. Knowing what you want going into the process will help you make advantageous decisions about the terms and conditions of the loan you are refinancing for. Below are some common reasons people choose to refinance their investment or rental property.

  1. Increase Cash Flow: A common reason many investors choose to refinance their commercial property is to maximize their return on investment. By choosing to refinance, you have the option to reduce your interest rate, lower your monthly payment, and even shorten the loan term. Taking advantage of current rates can lower your mortgage payment to increase your monthly profits.
  2. ‘Cash out’ Refinance: If you’re looking to invest in a new project but are short on cash, you may be interested in a ‘cash out refinance‘. With this type of refinance your existing mortgage is replaced with a new loan for more than you owe on your house. The difference goes to you in cash to spend how you choose.
  3. Reducing risk: Owning several investment, rental, or investment properties can carry an inherent risk, but refinancing offers an option to mitigate these risks. By consolidating your loans you can take advantage of the current low interest rates to pay off your loans faster and even receive fee reductions. 

How to prepare for a refinance?

As we have seen, the process to refinance an investment or rental property loan has various steps. In order to make the process more seamless, you will want to do all you can to prepare yourself and the property. Here are ways you can prepare to make the process easier.

  1. Prepare your documents ahead of time: There are several documents that you will be asked to provide for your refinance. Your lender will need to confirm your financial history, income, and assets, among other things. Here are some some examples of documents you will need:
  2. Last two pay stubs / rent receipts
  3. Bank statements for savings, checking, and business accounts
  4. Last two tax returns and W-2s
  5. Copies of rental lease(s)
  6. Proof of insurance
  7. Establish your goals: Before beginning the process to refinance your investment or rental property, establish your ‘why’. Are you looking to lower your monthly payment and interest rate? Do you want to change the type of rate? Are you looking to cash-out on the property’s equity? These are all questions to consider beforehand to make sure you are choosing the right refinance and loan for your situation.

Key takeaways:

  • The process to refinance your investment or rental property will typically take between 30-45 days
  • Refinancing your investment or rental property can be a financially beneficial decision
  • The process to refinance has many steps, the better prepared you are the better

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