Refinancing your home in Lake Nona (Orlando) to buy an investment property
Is refinancing your home to buy an investment property the right move for you?
As a homeowner in Lake Nona, you may be considering refinancing your home in order to buy an investment property. It's a big decision and one that shouldn't be taken lightly. There are a lot of factors to consider before making the jump into investment property ownership. In this blog post, we'll lay out some of the pros and cons of refinancing your home to buy an investment property, so that you can make an informed decision about what's right for you.
There are many reasons why you might want to purchase an investment property. Maybe you're looking to generate rental income, or you're hoping to cash in on the appreciation of the property over time. Whatever your motivation, if you're considering using the equity in your home to finance the purchase of an investment property, there are a few things you should know first. In this blog post, we'll explore some of the pros and cons of refinancing your home to buy an investment property.
The Pros of refinancing your Lake Nona home to buy an investment property:
-You may be able to get a lower interest rate:
If interest rates have dropped since you originally bought your home, refinancing could help you secure a lower interest rate on your mortgage. This could save you a significant amount of money over the life of your loan.
-You may be able to get a longer loan term:
When you refinance, you may be able to choose a longer loan term than your original mortgage. This could lower your monthly payments, freeing up cash that can be used elsewhere.
-You may be able to ditch PMI:
Private mortgage insurance (PMI) is required if you don't have 20% equity in your home. But if refinancing enables you to reach 20% equity, you may be able to cancel PMI, which would further reduce your monthly payments.
The Cons of refinancing your Lake Nona home to buy an investment property:
-You could end up paying more in interest:
If interest rates have gone up since you originally financed your home, refinancing into a new loan with a higher interest rate could end up costing you more money in the long run.
-You could lengthen the time it will take to pay off your mortgage:
Choosing a longer loan term when you refinance means it will take longer to pay off your mortgage completely. This isn't necessarily a bad thing—it could lower your monthly payments—but it's something to keep in mind if your goal is to pay off your mortgage as quickly as possible.
-You could lose equity in your home:
If housing prices have fallen since you bought your home, refinancing at today's lower value could leave you owing more on your mortgage than your home is actually worth—a situation known as being "underwater." In this case, it might make more sense to wait until housing prices rebound before refinancing.
Refinancing your home to buy an investment property is a big decision with a lot of potential upside—but also some risks that should not be ignored. Weighing the pros and cons carefully will help ensure that you make the best decision for your individual circumstances.
If you decide to go through, American Title Trust is here to assist you as your title company in Lake Nona.