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Updated over 3 years ago on . Most recent reply

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14
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Luke Siecinski
7
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14
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How does a cash-out refinance work?

Luke Siecinski
Posted

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!

Most Popular Reply

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73
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35
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Ryan Hamaker
  • Rental Property Investor
  • Tampa, FL
35
Votes |
73
Posts
Ryan Hamaker
  • Rental Property Investor
  • Tampa, FL
Replied

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.

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