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Updated about 3 years ago on . Most recent reply
Cash out refinance even if I lose little every month?
I'm in the process of refinancing an investment property I have owned for 3 years. The value has gone up significantly and I'm about to get a better rate too. I'm considering taking the max out that the LTV of 75% allows. I'll get more cash at closing to use for other deals, and to invest in general, but if I take out the max I'll also be about $100 short each month.
If rents continue to climb they way they have been here, and interest rates go up again, having that money at 3.5% and then only waiting a year or so to break even again seems appealing to me.
Obviously I could take out less and have a LTV of 65 or 70% but the point of this refinance was to lock in some of those gains, and get cash at a low rate for other investments.
Would you do it? Why/why not?
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@Jason Hirko
Right! When I do a cash out refinance, I shoot for 75% but also require that the property make at least a bit of positive cash flow ($150-$250 per month) just to build in a bit of conservatism. The extra 5% (or so) of equity being pulled out just isn’t worth “pushing it” in my opinion.
Troy