Difficulty of obtaining Cash Out Refinance for Retired couple?

Question

How difficult is it to obtain a cash-out refinance on a property for someone who is retired? My husband and I only have rental income (around $11k/month) and do not work. But we were hoping to do a cash out refinance on a 700k property which we own about 500k on. Is this possible right now?

Carlos Ptriawan · Answer

Hello Debbie, the best is if you can pay the debt service thru a conventional loan because the rate is much lower. Try this as much as possible, if you can't you can use a private lender but they usually only lend up to 50%-60% with 5%-6% rate.

Another way you can do: move to your rental, live there for two years, and just sell it to avoid paying the full tax.

Jared Rine · Answer

@Debbie Cost Thank you for the clarification. And I'm assuming the property is in CA. But to answer your question, there are ways to do what you're asking but the whole situation would need to be looked at. If conventional means would not be the way to go (I don't know if you have SSI or anything else + the rental income), but if that doesn't allow you to qualify, there are alternative loan programs that don't look at personal income at all. They just run off the property and your credit (which hopefully is good) but b/c of the more relaxed underwriting, the interest rates are higher. Loan to value also plays a factor in pricing. Did you have a certain amount of cash you were trying to obtain?? If you want more direction or want to share more, feel free to reach out. Thanks,

Debbie C. · Answer

Thanks for the reply. Sorry, I was perhaps not clear enough in my post. This is an investment property and the equity we now have is about $500k (I said "own 500k" in my original post, but maybe this is the wrong terminology - sorry I am not an expert in this!)...so our LTV is around 30%.

Jared Rine · Answer

@Debbie Cost...do you live in this property or is it investment? And where is it located? If this is an investment property, it sounds like you're already approaching a high leverage point if it's worth $700k and you already owe $500k. That's ~72% LTV already. What more were you looking to get? Most lenders aren't going to be much higher and once you associate costs, it won't be worth it. Unless I'm missing something from your post. Thanks,

Difficulty of obtaining Cash Out Refinance for Retired couple?

4 Replies