Cash Out Refi??

[Luke Carl]

Just purchased my second investment property (first in my name). Permanent residence is worth just over 200,000. I owe 150,000. I've lived here 3 years paying PMI on an FHA and the equity has come from increased property value. (Purchase price was 166k) I've read that cash out refis only allow 80% of property value is this true? 200k X .80 = 160,000 -150,000 This means I could only take out 10,000 and that's not enough for another down payment which would be my goal. Is my math correct? Are the other options for me? Should I take the 10k and add too it until I have down payment money (25k+-) or just do the refi to get rid of PMI and save the equity and find down payment money elsewhere??

[John Kesner]

Lucas Carl

Your math fits what my experience has been. The other part of a refi that you have to factor in is the refi appraisal. You see, an appraiser will have different values for your house depending on what you are asking of the bank (appraiser works for them). On a refi typically the appraisal will be much more conservative than on a purchase. And the bank will only lend on what the appraisal says.

If you search you will find some talk about putting together an appraisal package. Its just some info about the comps in the area, what you have done to upgrade your house, maybe some market condition that is affecting your neighborhood specifically, anything you can think of that will help the appraiser get to the number you want/need/think is fair.

Appraiser's can kill deals and/or keep your cash locked up so having a plan when dealing with them is worth the effort. That is of course that you get a chance to talk to them and they don't do a drive-by appraisal (no joking).

Good Luck with your cash out if that's what you decide to do.

-John