Cash Out Refinance - Investing In Real Estate Using Cash Out Refinancing

http://www.REIClub.com - Cash Out Refinancing Has It's Pros and Cons. Here's a Video on How A Cash Out Refinance Works for Real Estate Investors... Hi, this is Frank Chen with REIClub.com, the only site you need as a real estate investor. Today I've got a quick video on cash out refinancing, and using that money to invest in real estate. Cash-out Refinance vs. Home Equity Loan Home Equity Loan - separate loan on top of your first mortgage (2nd mortgage), but keeps existing rates Cash-out Refinance - replaces your first mortgage, at better rates (if possible), borrow more than you owe A cash-out refinance allows a homeowner to access the equity of their home. For example, the home's value is $100,000 and the current loan balance is $50,000. The homeowner would like to have $20,000. The home could be refinanced for $70,000. The old mortgage would take $50,000 of the financed amount to pay it off, and the homeowner would receive the other $20,000. The payment on the new mortgage would be based on current rates and closing costs? Pros - low cost way to borrow money from property you own - get better interest rates and terms - Improves cash flow by securing lower monthly payments only during low rates - Build equity faster - secure shorter loan term or could be longer depending on circumstance - Improve your credit - consolidate debt, pay bills - College tuition - Down payment for an investment property - nets cashflow - Use it on home improvements to increase property value - Tax Benefits - mortgage interest is tax-deductible - Not having to pay two loans like a Home Equity Loan Cons - Fees - hundreds to thousands in closing costs - depends on credit score and equity in property - Sometimes you're paying more on fees than money borrowed - Longer time to pay off your mortgage - extending loan - If property values drop, lose the equity you borrowed on - Harder on you when you sell - AVOID NEGATIVE AMORTIZATION LOANS IF STILL AVAILABLE - LESS LENDERS AVAILABLE TO MAKE THESE LOANS NOWADAYS - HARDER TO QUALIFY NOW - RISING INTEREST RATE ENVIRONMENT NOW Disclaimer: Cash-out refinancing may not be suitable for everyone. It does depend on your current financial situation, and still best to consult with a banker, or mortgage professional to assure that this is an option for you. With any mortgage refinance, it is important to understand the costs involved. Not just your monthly payments, but your terms and interests rates too because that's where they get ya. It's important to avoid serial refinancing your mortgage if at all possible. Because if you're not paying attention, you could land yourself in a negative equity position. That's why a refinance should really only be reserved for times of great need, or in times when rates are simply too good to pass up. Again, this is Frank Chen with REIClub.com. Please take the time to leave your comments for this video below and please subscribe to our YouTube channel so you'll be automatically notified when we upload more quick video tips for you. Take care and good investing. https://www.youtube.com/watch?v=0XZBdmVRCDY

Comments

1. Great video
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3. Great information and thanks for your help.
4. I've been able to do this a time or two to get down payment money for additional properties. In my market (Michigan) most houses appraise for double what they sell for. Banks have a "seasoning" period for 1 year before they will give cash out in a refinance. This "seasoning" is slowing down my ability to grow QUICKLY. Any advice on how to avoid this or other ideas on how to grow QUICKLY and take advantage of the market and rates? Thanks for all you do!
5. are banks to cash out refi's ?
6. Working on a Cash Out Loan right now. Plenty of good investment opportunities out there in Albuquerque NM!
7. As always, great information my friend!
8. Very informative and will consider for future reference
9. What types of credit scores do you need to pull cash out to buy more rentals? I want to purchase a four family, or three single family homes, but am unsure when to approach the bank. Thanks for any help on this..
10. Hello, I have four properties paid in full. A four family worth 268K, a single family home worth, 80K, another single family home worth 98K, and a Condo worth 156K. The first three amounts are rental properties that generate 3750 in cash before expenses. I cash flow over 1K a month after taxes. My credit score is not good, but I have taken out a small car loan at a terrible interest rate and a prepaid credit card to help improve my credit. I have noticed my credit score improve.