I have a question for anyone who may be experienced with the process of refinancing a rental property. I currently have a rental property that I put 25% down on last year. I was wondering if it is possible to refinance the property for the whole value (or close to it) and then use that money to put down on another property? I have gained about 3k in equity from paying down the loan, and purchased the property for maybe 5k less than the appraisal price. The property is cash flowing nicely so the increased mortgage payment wouldn't hurt to significantly, and my current mortgage in on a 15 year amoritization. Is this a realistic approach that a lender would allow, both on the refinancing side and then also on the aspect of using that cash to put as a down payment on another property? Thanks in advance for the insight!
Not sure that you'll find a lender that will do 100% LTV. I've found 75%, but my property is free and clear so it works. If you only have 25% equity, there may be little to cash out. Also, some require seasoning of different periods to use actual value. Depending on bank requirements, they may only use the purchase price as a starting point.
Good luck to you!
Agree with @Ursula B. ... most banks will lend upto 75% of current appraised value and some will restrict it to original purchase price.
usually 75-80% of appraised value after paying off all liens/HELOCs, etc.
Thanks for the responses. I assumed that since I couldn't have less than 75% LTV to purchase the property, I probably couldn't do it to refinance, but I wasn't sure how refinancing worked.
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