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Mortgage interest rates have been near record lows for the past several years. At the same time property values have jumped dramatically, giving homeowners plenty of equity. Those two factors combine to make right now an excellent time to get a cash-out refinance loan. 

But what if you own rental properties or investment homes? Could you take out a cash-out loan on them? And should you? Here are some reasons you might consider using that type of mortgage on your rental properties.

Improving Your Rental Units

If your investment home or apartments have been in need of some significant repairs or renovations, pulling cash out of your equity could be a cost-effective way to pay for it. Once you update or fix the properties, the value will increase, bumping up your equity and allowing you to charge more in rent.  Refinance loans always come with closing costs and fees though (even if it's at the back-end) so be sure to make sure the numbers pencil out.

Expanding Your Rental Business

If your rental business is running smoothly, a cash-out refinance might be a way to get a down payment for another investment property to your portfolio. Depending on how much you have in equity, you may even be able to pay outright for your next rental unit.

Lowering Your Interest Rates

Since rates are still low for now, if you took out mortgages at a higher cost several years ago, this may be a good time to get a cash-out refinance. You’ll reduce your overall mortgage costs and still be able to pull out some equity for projects.

Personal Financial Help

Life is unpredictable and you might need the cash for your own life needs. It could be medical expenses, sending a kid to college, or even to pay for your retirement expenses. Cash-out refinance mortgages are great because even though the loan is tied to your property, you can use the money for any purpose whatsoever.

Requirements for an Investment Property Cash-Out Refinance 

Lenders will want to see that you have a significant amount of equity in your rental unit. That means having a nice low loan-to-value ratio. You will also need to have a decent credit profile for approval and the higher your score, the lower the interest rate you’ll pay. In addition, the mortgage lender will look for a low debt-to-income ratio. This does not mean that you can’t have any debt, but simply that even with all the money you owe on your rental property, the income being brought in by it provides plenty of cushion to make the payments.

So the answer is yes, you can take out a cash-out refinance on your investment properties, but whether you should depends on your individual situation and finances. Call us today, we can help you run the numbers.

Buying a home for the first time is often exciting, scary, and overwhelming all at the same time. When you’re ready to move on from your starter home, you will be familiar with the home buying process, but there are still a few things you might want to consider as a second-time buyer.

1. Interest Rates
   Depending on how long ago you bought your first home, conditions in the housing market may have changed dramatically and could affect second purchase. For example, long-term mortgage interest rates are current near historic lows, having stayed around or under 3% for over a year, whereas they were reaching around 5% three years ago. That amount of interest can make a big difference in how much house you can afford the second time around. If rates are significantly higher than when you bought your first place, you might need to save up a bigger down payment or consider paying more mortgage points to buy down your new interest rate.
   
2. Inventory
   You may be pickier the second time you buy a home; you’ve had time to figure out which features you do and don’t like in a house as well as ones you wish you had. Your selection of homes may be smaller just by virtue of your preferences, but you should also pay attention to house much inventory is available in general. In today’s market, demand is far outstripping available housing supply, limiting buyers’ ability to move up in homes. Your real estate agent can give you a good idea of current inventory conditions.
   
3. Home Prices
   How quickly home prices are rising may be a big factor in which next house you buy. Today, high demand, ultra-low interest rates, and anemic inventory have pushed prices to all-time records. Wages have not been keeping up with home value increases though, making it harder for Americans to afford a new home. General inflation levels are climbing faster than salaries as well. All these factors play into whether you can reasonably buy your next home now.
   
4. Available Mortgage Credit
   Mortgage lending standards vary from time to time and you may need to improve your credit profile this time around to qualify. For example, before the finance crisis in 2008, lenders were very liberal with funding, making plenty of riskier loans like interest-only and no-documentation mortgages. Today, however, standards are higher, with better credit scores and more proof of income and assets required. You should also take a look at your debt-to-income ratio; if you’ve taken on a significant amount of debt since buying your first home, it may change how much you can borrow or at what rate.
   
5. Selling Your Current Home While Buying
   This is one of the most nerve-wracking aspects of buying your next home. Typically, buyers can put in an offer with a contingency that they can back out if their own home does not sell in time. In competitive markets though, sellers may only accept contingency-free offers. In this case, one option is to try to sell your home first and then hope something is available when it goes under contract. Another option is to sell your home to one of the companies that buy homes with cash but let you stay in your place until you find that right one.
   
6. Changes to House Construction
   Housing codes are always being updated. You may want to familiarize yourself with what is being required in new homes in terms of safety to see if those changes are important to you in a second house. You may also want to consider finding a place with more energy efficiency upgrades to reduce your utility costs going forward.
   
7. Length of Stay
   Finally, consider how long you plan to live in this second purchase. If it’s a substantial amount of time, you may be more concerned with the longevity and quality of the roof and HVAC systems and other large structures and features that could cost you a lot to replace down the line. And if your family will be growing or shrinking during the time you live in this next place, its good to find a home that can adapt to those needs.

Having revolutionized everything from the auto industry to healthcare tech to the airline business, 3-D printing is poised to dramatically change the American housing market.

Lennar Corp., one of the largest U.S. homebuilders, has teamed up with Texas startup Icon to create an entire development near Austin with 100 3-D printed homes. This mass-scale project, set to begin in 2022, will be a test of the new technology’s ability to produce quality houses in bulk quantity.

“We’re sort of graduating from singles and dozens of homes to hundreds of homes,” said Jason Ballard, Icon’s chief executive.

Today, almost all new single-family homes are constructed on-site, using traditional building methods and wood framing.  However, a shift in labor choices over the past decade has pushed builders to consider more innovative options.

“Skilled tradesmen are a dying breed,” said Eric Feder, president of LenX, Lennar’s venture-capital and innovation unit. “So there have to be alternative building solutions to help with this labor deficit.”

For printing a home’s wall system, Icon only requires three on-site workers, compared to the six to 12 framers and drywall installers involved in a conventional build.

And instead of lumber, the 3-D printed houses from Icon use concrete, squeezed out in layers into molds, allowing for even curved walls and other designs often considered too complex and expensive to build. 

While it takes Icon roughly the same amount of time to print a 2,00-square-foot home’s interior and exterior wall system as it does to frame it with traditional methods, the company hopes to speed up the process as it gains more experience. 

That would spell great news for the current housing market where housing demand has far outstripped available inventory for over a year. 

And theoretically prices could come down eventually as well. Using less waste and fewer materials, 3-D printed homes can be made cheaper than typical houses.

However, Lennar has not determined its pricing for the near-Austin development, and buyers are not likely to see a large discount from the average surrounding prices at this point. The builder will be completing the homes with traditional construction methods, which will add to the labor and material costs.

Icon has a proven track record of producing fully-functional 3-D homes, having built 10 two-bedroom homes in Tabasco, Mexico and seven one-bedroom tiny homes and four two-story single-family residences in Austin. 

It remains to be seen, though, if consumers across the country will welcome the concept and look of 3-D printed homes. For example, because of the layered printing technique, Icon’s exterior wall and some interior ones include horizontal ridges that are not part of traditional homes.

And as a new, less-tested construction method, it is unclear if mortgage lenders will require any different qualifications or terms on 3-D printed homes. 

Still, demand appears to be strong among early-adopters. Another 3-D construction company, Oakland, Calif.-based Mighty Buildings already has a long wait list for its 15-lot community slated to break ground in southern California next year. 

Only time will tell if our American landscapes of Brownstones, Cape Cods and Craftsman homes will soon be replaced with these space-age technology dwellings.