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Should you refinance the mortgage loans on your investment properties?

by | Jan 11, 2021 | Real Estate Practice

Mortgage interest rates are currently close to the lowest they’ve ever been in the U.S. Even though this has motivated many homeowners and real estate investors to try and refinance their mortgages; this isn’t the ideal option for everyone. You need to consider various factors before deciding whether refinancing any loans is right for you. 

Factors that can help you make decisions about refinancing

Perhaps the most critical factor to consider when deciding whether to refinance your mortgage is the health of your credit score. Lenders reserve the lowest interest rates for those borrowers who have above-average credit scores. Keep in mind that lenders may pull your score from one or all three credit bureaus, including Equifax, TransUnion and Experian, so it can help if you check each report for mistakes. Any negative information can lower your score and make it harder to gain an interest rate that makes refinancing worthwhile.

You’ll also want to assess how much equity you may have built up in your property before deciding whether to refinance your mortgage. Lenders typically don’t loan homeowners more than 80 to 90% of the home’s value. Therefore, you may find it best to delay refinancing your mortgage if you have less than 80% equity built up in it. 

Fees are another factor that you may want to consider before refinancing your mortgage. You can expect to pay an application, appraisal, inspection, attorney and closing fees, as well as insurance and title search costs before you close on your refinanced loan. The combination of these fees may make refinancing your mortgage cost-prohibitive at this point.

How to proceed if you decide that refinancing is right for you

Refinancing your Pennsylvania mortgage involves a lot more effort than simply finding a lender offering the lowest possible interest rate. A real estate law attorney experienced in working with investors like yourself can answer your questions about how to best refinance the mortgages for your portfolio of Pittsburgh properties so that you know what to expect every step of the process.