Rental Property

• A rental property might boost your current monthly income or provide an additional income stream during your retirement. If you have long-term tenants or a property that's fairly easy to rent, you could save the difference between the monthly rental amount and your required mortgage payment for steady income. If you already have a rental property, refinancing might enable you to lower the payments on it.
  
  

Refinancing

• Refinancing allows a homeowner to change his existing mortgage terms. If you want to refinance, you should research several sources to find favorable terms. Local mortgage companies, neighborhood banks, credit unions and lenders found online (see Resources) might provide valuable insight toward helping you refinance your rental property. Compare your findings with terms that your existing lender provides.
  
  

Lower Payments

• Lower payments on your rental property could help increase your monthly income, as the difference between your collected rent and your lower mortgage payment may result in more discretionary cash. Refinancing to obtain a lower payment could better prepare you for a property vacancy, if a tenant does not renew her lease. For instance, if your rental property generates $1,000 per month, refinancing might lower your payment to $850 per month. Based on this example, you would pay $150 less per month ($1,000 before refinancing minus the $850 new payment equals $150 in savings per month).
  
  

Considerations

• Refinancing might enable you to increase the number of years to pay off your rental property, while simultaneously lowering your monthly mortgage payment. You may be able to obtain cash from the equity within your rental property or receive proceeds for improving the property's condition. Ensure that your creditors are paid up to date before applying for an investment property loan (see Resources). You'll need to gain a loan approval that's based on factors such as your credit score, property value and income.