Help with cash-out refinance

[Samuel Watts]

Hello! I just got my first single family home under contract today and it should close in the next few weeks and plan to live in it for at least 6 months afterwards (Hoping to cash out refinance after)I am getting a conventional 30 yr loan and haven't decided on whether or not to put 10% or 20% down. Can I take more out on the refinance if I do 20%? 

The purchase price is 72,000 and it should appraise somewhere around 85-95k I believe. How much cash should I expect to be able to pull out on the refinance to purchase another property?

[Chris Mason]

Hi @Samuel Watts,

Nope. LTV is just based on appraisal. Your net proceeds from the cash out will of course depend on your existing mortgage balance.

Ah, now I see why you are over-thinking this. You are a real estate agent. Stop thinking like a real estate agent. 

Cash out refi net proceeds = [ new loan amount - closing costs - old loan amount ]. New loan amount will be capped by the relevant LTV limit. That's it. No over-thinking, and especially no trying to think in terms of down payment amount "making your offer stronger" like a real estate agent! :) There is no purchase price here, the house is worth whatever the appraiser says it is worth.

You can pay your balance down a bit, or make a larger down payment, and net more cash out, but this is just moving money from your right pocket to your left pocket unless you're years away from that refinance or home sale.