When is it Smart to Take Cash Out of Your Investment Property Mortgage?

The decision to refinance commercial mortgages and take cash out can provide real benefits for real estate investors. But knowing whether it’s the right choice for you can be difficult if you don’t know the pros and cons or whether the time is right.

The point of a residential or commercial cash-out refinance is to refinance your mortgage while also taking out a cash loan against the equity you have in the property, and this can help investors to achieve a number of goals. Today we’re going to talk about different cash-out scenarios and discuss how you can determine when the time is right for you to take advantage of this financing option.

When you can negotiate a better interest rate

Refinancing investment property mortgages comes with some fees, but if you can renegotiate at a lower interest rate than what you're currently paying, then you could save yourself thousands of dollars or more over the course of your mortgage. This is especially true right now, when interest rates are at historical lows. However, rates are expected to rise, so timing is everything if you want to cash in on a lower rate, reduce your monthly payments, and possibly even pay your mortgage off faster.

When you want to nurture a new investment

One of the most common reasons why people opt for cash-out refinancing is to raise capital for a new investment, such as getting the down payment for a new investment property. However, you can also use the money for other types of investments, such as equity, buying other assets, or investing in a business.

When you want to make upgrades to a current investment

Property improvements or renovations are among the most popular reasons for refinancing commercial mortgages and taking cash out, and there are many benefits to this. Most importantly, you're using equity in a property to further increase the value of that property, meaning you stand to make even more money on the investment when all is said and done.

When you’ve got a plan to repay the loan

The problem with a cash-out refinance is that you're putting your property and possibly your home on the line, and if you aren't able to repay the money, then you could risk foreclosure. As such, it’s crucial that you only opt for cash-out refinancing when you have a plan and the means to repay the new mortgage. In other words, if you want a loan because you need to cover bills or are strapped for cash, then you may want to consider other options for fixing your current financial predicament.

Refinancing investment property mortgages and taking cash out can be a great option if you want capital for a new investment or want money to renovate a current property, especially if you can negotiate a better interest rate in the process.

However, it’s also important that you have a plan to repay the money, because otherwise, you might be putting too much at risk. Contact us today to get the application started for your commercial loan or cash out refinance.