How to Refinance a Secondary Home

Refinance your second home to reduce your interest rate.

There's nothing better than owning a second home that you can use for either rental or vacations--unless, of course, it's refinancing that home to get a lower interest rate on your mortgage. The process for doing this is essentially the same as for your primary residence. Just get your paperwork in order and show up for the closing.

Things You'll Need

• Copies of your last 2 years of tax returns
• Copies of your latest W-2s
• Copies of all of your most recent liquid asset statements
• Copies of all debt statements, such as your mortgage
• A copy of your homeowner's insurance policy
• Recent copy of home appraisal
• Any other documents required by your loan officer

Instructions

1. Shop around to see where you can get the best deal. Visit bankrate.com and talk to your local bank to see who is willing to offer you the lowest rate. In today's competitive environment, you should be able to secure several decent possibilities if your credit is good.

2. Get a qualified appraisal of your second home. This appraisal generally cannot be older than 90 days in order to be valid. The value assigned to your home will determine in part the terms you are able to get on your mortgage.

3. Gather all of the documents listed above and meet with your lender or broker. They will pull your credit report and inform you of any other documents that you may need to supply.

4. Decide whether you want to buy down points on your mortgage. You can usually deduct points paid on a refinance over the life of the loan. Consult your tax or financial advisor to see whether or not this is a wise choice for you.

5. Wait for your loan to get approved and then show up to the closing to sign all of the documents. Opt for biweekly payments to reduce the life of your loan if your cash flow permits.

References

• Bankrate
• IRS: Schedule A Instructions
• Mortgage 101