How does a cash-out refinance work?

[Luke Siecinski]

Hello! I'm trying to tap into the equity in my home to hopefully start investing in real estate but I need help calculating how much cash I could actually pocket if I did a cash out refi.

I purchased the home for 200K but it's now worth 235k. I did a 5% down conventional with PMI on it, so I owe (according to my loancare.com account) about $186k still on the home. This means I have about 49k in equity in my home correct? Here's where I keep getting stumped on different google search results. How much of that equity do I actually get to take advantage of? I've read that I can typically take 80% of the equity, so 39k-40k. Is that true? But I've also read that the new loan for a cash out refi can only be up to 80% of the homes value, and you take the difference of the new loan and the amount you currently owe and that's the cash you have available. So that would be 235k * 80% = 188k - 186k(what I still owe) = 2k. Obviously both these scenarios present two totally different outcomes so I'm just trying to officially figure out what it is so my brain doesn't explode. Thanks in advance!

[Ryan Hamaker]

Raising some down payment cash through other investors is a likely fix to your dilemma. I've done that with nearly every SFR rental in my portfolio.