You Can Refinance to Make More Investments. Here’s How.
Refinancing a property allows you to replace your current loan with a better one. The new mortgage loan will pay off the debt of the previous loan. If your financial situation has changed in the years since you first got the loan, or if there are more beneficial terms now available to you, a refinance may be a great way to improve your finances. In fact, you can even use a refinance as a way to make more investments. This can be a smart way to take advantage of the equity you have in a property.
There are benefits and risks to refinancing, but when done in a smart way, it can help you get the most out of your finances and grow your investments.
What does refinancing cost?
Applying online is free, but there will usually be some fees along the way, no matter what lender you go through. In general, the cost of refinancing a mortgage loan is approximately 2% to 5% of the loan’s principal. Before you refinance, you need to ensure that the cost is worth the amount of money you will make when you refinance and invest the difference.
Is it possible for foreign or overseas real estate investors to refinance?
Yes, as long as you go through a bank that can accommodate overseas or foreign investors. Most United States-based banks cannot accommodate real estate investors from overseas. However, there are some lenders, such as USA Mortgages, that allow financing for foreign investors. With offices in eight different countries, USA Mortgages is able to work with property owners all over the world to assist purchase or refinance properties.
Why should I look for a lower interest rate?
When refinancing, most property owners look for a lower interest rate. When you pay a lower interest rate on a loan, even if the difference doesn’t seem like a lot, it will add up. It helps you save money on each payment, which will add up over time, but the benefits stretch further than that: It will also help you build more equity at a faster rate.
What does refinancing entail?
When refinancing a property, you will have to go through essentially the same loan approval process that you did when you first got the loan. It requires a home appraisal, a title search, and often, application fees. When you go through USA Mortgages, their dedicated team will guide you through the whole refinancing process, answering your questions and ensuing that the loan approval goes as quickly as possible.
Is it a good idea to refinance in order to tap equity?
As long as you have enough equity built up, and as long as the new loan terms are more favorable (i.e. a lower interest rate, shorter term or other benefits) it may be a good idea to refinance in order to tap equity. When doing so, it is best to use the resulting money in a beneficial way.
Many financial investors will argue against using the money for regular purchases, such as a new vehicle. That’s because it could potentially lead to a slippery slope of debt if you aren’t careful. Of course, this depends on your financial situation.
But if you resist the temptation to spend and instead invest the resulting money, then you can save on your home loan while also making money off of the equity. This can be a great financial move for growing your wealth.
How should I invest the resulting money?
The answer to this question will be different for everyone. It depends on your financial situation, your current portfolio, and more. You may choose to invest the resulting cash into another real estate property, either overseas or in your home country. You may wish to invest in the stock market. We would suggest working with your financial advisor to decide the best way to invest your money to grow wealth.
Leveraging your investments to make even more money is a smart choice. Right now, in the era of COVID-19, many things are uncertain – but you can set yourself up for future success by putting your money into investments that will grow your financial status over the long term.
If you are an overseas or foreign investor who is interested in refinancing a mortgage, talk to the experts at USA Mortgage. We would be happy to help you cash out your property so that you can reinvest. Let’s get started – you can apply for free today!