How to Refinance a Duplex
If you own a duplex, whether you live in one part of it or use it strictly as an investment property, you can refinance the mortgage loan to take advantage of lower interest rates and lower your monthly mortgage payment. Refinancing a duplex is similar to refinancing a single-family home, except that lenders are stricter when it comes to the amount of equity you'll need--20 percent.
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Things You'll Need
- Copies of your two most recent federal income tax returns
- Copies of your checking and savings account statements
- Copies of your credit-card and other loan statements
- Copy of your current income statement
- Proof of monthly income, including copies of your two most recent paychecks and copies of the monthly rent checks you receive if you rent out all or part of your duplex
Instructions
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1
Gather the financial paperwork you'll need to complete a refinance. This includes copies of your two most recent federal income tax returns, copies of your two most recent paychecks, copies of your credit-card bills and other loan statements, and copies of rent checks that you receive from any tenants living in your duplex.
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2
Call your lender at the number listed on your most recent mortgage statement. Tell your lender that you own a duplex and would like to refinance it. Tell your lender, too, if you live in the duplex--making it your primary residence--or if you use it as an investment property, meaning that you rent out both units. You don't have to work with your current lender to get a refinance, though it's usually easier to start with the lender who already holds your loan.
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3
Give your lender permission to check your credit history. Lenders today rely on credit scores to determine who gets loans and at what interest rates. You'll need a good credit score--720 or higher--to qualify for the top interest rates when refinancing a duplex.
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4
Pay for an appraisal to be done of your duplex. This will usually cost about $400. An appraiser will determine how much your duplex is currently worth. This is important, because you usually need 20 percent equity in your duplex to earn approval for a refinance. If your duplex has fallen in value, you might not have enough equity.
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Mail or fax your lender the financial paperwork described in Step 1. Your lender will look at this to make sure that your income is high enough to qualify you for a refinance.
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6
Sign the loan closing documents, which your lender will provide, if your duplex appraises at a high enough rate and your monthly income is high enough. You then can agree on a closing date for your new lower-interest-rate loan.
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Tips & Warnings
If your current lender denies your refinance request, or offers interest rates that you don't think are low enough, contact other lenders. You are not required to refinance with the lender who holds your existing mortgage loan.
