Understanding Cash out Refinances

[Jorden P Dupont]

Good Morning everyone!

A couple friends and I had dinner a few nights ago and cash out refinances came up. My questions are, when you do a cash out refinance... lets say you buy a property for 50k. You do a 50k rehab so youre 100k in total. The property appraises for 200k. The bank says okay we'll give you 70% of the new value.

- Do they just give wire you 140k right into your account?

- The bank keeps the 30% so they can make money on the interest. But whats your new mortgage amount on? Is it on the whole 200k? Is only on the 70% they gave you?

- How long are you paying this new amount off for?

I understand when you refi your mortgage payment increases, cash flow decreases but now you have the capital to go repeat this process

Appreciate all the help! It really helps me fill in the gaps of knowledge about BRRRR.