Posted on: 12th Dec, 2007 08:31 pm
i just had my house appraised. i currently use it as a rental/ investment property. the appraised value was $185000. i am pondering doing a refinance with cash out. i just dont know exactly how that works. my current balance owed on the house is $87200. if i do the refinance does that mean that i
can get a new mortgage for $185000 (the appraised value) and i would pay off the $87200 owed and the
remaining $97800 would be paid to me. i use this property as a investment property and my current tenants pay the mortgage. so the higher mortgage balance doesnt bother me or hit my pocket at all. i would actually be getting a bigger tax break on the increase of interest. does it sound like i know what i am talking about. if not please help.
can get a new mortgage for $185000 (the appraised value) and i would pay off the $87200 owed and the
remaining $97800 would be paid to me. i use this property as a investment property and my current tenants pay the mortgage. so the higher mortgage balance doesnt bother me or hit my pocket at all. i would actually be getting a bigger tax break on the increase of interest. does it sound like i know what i am talking about. if not please help.
Welcome Alphilkel,
If the appraised value is $185000, then you can get a new mortgage maximum of that amount when you refinance. So, if your current balance is $87200, then the loan amount in excess of this figure will be the extra cash obtained.
Thus, what you have mentined here is correct. But whether you will get a loan amount of $185000 will depend upon a lot of factors such as your financial situation and past credit record.
If the appraised value is $185000, then you can get a new mortgage maximum of that amount when you refinance. So, if your current balance is $87200, then the loan amount in excess of this figure will be the extra cash obtained.
Thus, what you have mentined here is correct. But whether you will get a loan amount of $185000 will depend upon a lot of factors such as your financial situation and past credit record.
Welcome to the forum Alphilkel,
Yes, you might be able to refinance the home to take cash out. As this in an investment property, I would highly doubt that you will be able to obtain a loan for the full appraised value though as lenders are rarely loaning the full appraised value of investment properties at this time. There will be several factors involved in determining the amount of cash out you can receive; the state the property is located in, your previous credit history, the documentation you can provide for the loan, etc.
Yes, the higher mortgage interest amount might help reduce your tax burden some. Would the rent you receive cover the additional mortgage payments? If so, taking the cash out might be a great choice. Also, if you are need of some extra money, refinancing could be a great choice for you.
If you have an accountant, you might want to ask them to run an analysis for you prior to proceding, only to be sure the new loan would actually provide a benefit to your situation.
Best of luck.
Yes, you might be able to refinance the home to take cash out. As this in an investment property, I would highly doubt that you will be able to obtain a loan for the full appraised value though as lenders are rarely loaning the full appraised value of investment properties at this time. There will be several factors involved in determining the amount of cash out you can receive; the state the property is located in, your previous credit history, the documentation you can provide for the loan, etc.
Yes, the higher mortgage interest amount might help reduce your tax burden some. Would the rent you receive cover the additional mortgage payments? If so, taking the cash out might be a great choice. Also, if you are need of some extra money, refinancing could be a great choice for you.
If you have an accountant, you might want to ask them to run an analysis for you prior to proceding, only to be sure the new loan would actually provide a benefit to your situation.
Best of luck.
Alphilkel Posted: 12 Dec 2007 20:31 Post subject: Refinance with cash out
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I just had my house appraised. I currently use it as a rental/ investment property. The appraised value was $185000. I am pondering doing a refinance with cash out. I just dont know exactly how that works. My current Balance owed on the house is $87200. If I do the refinance does that mean that I
can get a new mortgage for $185000 (the appraised value) and I would pay off the $87200 owed and the
remaining $97800 would be paid to me.You will not be able to take cash out to 100% on an investment home... I use this property as a investment property and my current tenants pay the mortgage. So the higher mortgage balance doesnt bother me or hit my pocket at all. I would actually be getting a bigger tax break on the increase of interest. No actually that is wrong as well......mortgage interest on a rental property is not tax deductable you can however depriciate the asset.....talk to your CPA about this..... Does it sound like I know what I am talking about. If not please help.
You can do a cash out refi on a rental property.....and depending on your loan to value,credit scores etc......get up to 90% of the appraised value.....however if you don't need the cash i would recomend keeping the loan to value at 80% or lower......
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I just had my house appraised. I currently use it as a rental/ investment property. The appraised value was $185000. I am pondering doing a refinance with cash out. I just dont know exactly how that works. My current Balance owed on the house is $87200. If I do the refinance does that mean that I
can get a new mortgage for $185000 (the appraised value) and I would pay off the $87200 owed and the
remaining $97800 would be paid to me.You will not be able to take cash out to 100% on an investment home... I use this property as a investment property and my current tenants pay the mortgage. So the higher mortgage balance doesnt bother me or hit my pocket at all. I would actually be getting a bigger tax break on the increase of interest. No actually that is wrong as well......mortgage interest on a rental property is not tax deductable you can however depriciate the asset.....talk to your CPA about this..... Does it sound like I know what I am talking about. If not please help.
You can do a cash out refi on a rental property.....and depending on your loan to value,credit scores etc......get up to 90% of the appraised value.....however if you don't need the cash i would recomend keeping the loan to value at 80% or lower......
If your property is worth 185k then you can get a loan based on percentage of this value. Being an investment property it is likely that you can only get up to 90% of the value maximum ( if you have great credit and can go with a full documentation loan ) without actually selling the property.
So to give you an example you could get a loan of 166,500 if you had a 90% loan. This loan would payoff your current mortgage of 87,200 + pay for closing costs (3-5k) and the rest would come to you as cash. Your new mortgage payment would increase since you borrowing more now. In this example if you were to get a rate of 7% on 166,500 your payment would end up being 1108/mon and you would end up with 73-75k cash.
So to give you an example you could get a loan of 166,500 if you had a 90% loan. This loan would payoff your current mortgage of 87,200 + pay for closing costs (3-5k) and the rest would come to you as cash. Your new mortgage payment would increase since you borrowing more now. In this example if you were to get a rate of 7% on 166,500 your payment would end up being 1108/mon and you would end up with 73-75k cash.
Hi Alphilkel,
Eugene has explained it quit well to you. Cash out refinance is a good option for you but on an investment property you cannot take 100% cash out. In spite of that you have good amount of cash in hand.
Thanks,
Larry
Eugene has explained it quit well to you. Cash out refinance is a good option for you but on an investment property you cannot take 100% cash out. In spite of that you have good amount of cash in hand.
Thanks,
Larry
oops! it was me above. Just got log out. Sorry:)
Hi Alphilkel,
I would suggest only going to 80% of the home's value to avoid PMI insurance as well as getting a better rate. With the equity that you have, you can still take some cash out and get a great rate right now.
I would suggest only going to 80% of the home's value to avoid PMI insurance as well as getting a better rate. With the equity that you have, you can still take some cash out and get a great rate right now.