The benefits of refinancing a multifamily property include the ability to adjust loan terms, potentially lower interest rates, and access to cash-out refinance options. Adjusting the loan term might provide the option to choose a longer-term, fixed-rate loan to avoid economic uncertainties in the future and lower your monthly payments. A refinance might also allow you to shorten your loan term in order to pay the property off faster. Qualifying for a lower rate now might save you thousands of dollars throughout the lifespan of the loan. A cash-out refinance might allow you to tap into the equity you have accumulated over the years, replacing the old funding with a new loan that is larger than the amount needed to pay off the old note, as explained by Forbes. The difference between the two loans can be kept by the borrower and used for property upgrades or investing in another asset.

The steps involved in refinancing a multifamily property include:

• Having enough equity in the property (at least 25% of equity, with a loan-to-value ratio (LTV) that cannot typically exceed 75%)
• Preparing documents such as recent W-2 forms or pay stubs, current lease agreements for the property, and the most recent two years worth of personal and business tax returns
• Having a debt-to-income ratio (DTI) of 36% or lower, and under no circumstances should it be higher than 50%
• Being prepared to answer tough questions about the property's value and credit score
• Expecting closing fees of around $5,000, which usually varies depending on the size of the loan and the location of the property

For more information, please see Why You Should Refinance Your Multifamily Property Now and 5 Ways to Find the Best Multifamily Refinance in a Recession.

The different types of multifamily refinance loans are conventional loans, which are typically offered by banks and other financial institutions, and are often used to purchase or refinance existing properties. Conventional loans may be offered at a fixed or floating interest rate, and they often require a substantial down payment and a good credit score. Refinancing loans are used to refinance existing debt on a multifamily property. There are several reasons why an investor would choose to refinance, such as to take advantage of better rates, to take advantage of a property's improved performance, or to avoid a balloon payment at the end of the loan term.

Sources:

• Multifamily Financing: Your Comprehensive Guide
• What Is Multifamily Finance? A Beginner's Guide

To qualify for a multifamily refinance loan, borrowers must typically meet certain qualifications, including income and debt ratios. Lenders will consider the borrower's income and debt ratios to determine their ability to repay the loan. For more information, please visit Multifamily Financing: Your Comprehensive Guide.

In order to apply for a multifamily refinance loan, you will need to provide the following documents:

• Apartment Finance Document Templates, which includes:
  • Personal Financial Statement
  • Business Financial Statement
  • Rent Roll
  • Lease Abstract
  • Operating Statement
  • Property Appraisal
  • Environmental Report
  • Property Inspection Report
  • Title Report
  • Survey

The current interest rates for multifamily refinance loans are 4.95% - 7.05%, according to Multifamily Mortgage Rates.