Refinance Cashout

Please help me out here. I was wondering how refiance cashout works.

for example: a SFH market value is $100,000, and I purchase it on 30% discount, which I pay $70,000. There are two options to fiance this property:
1). Use 100% finance - $14,000 on 11% interest rate, $56,000 on 7% interest rate.
2). Use $14,000 my own money and $56,000 on 7% interest rate
This will be rental property, and assume it will have 100-200 postive cash flow.
1). Which option makes more sense?
2). Could I get any more cash out if I refiance the deal? If refiance, the lander will use the market value($100,000) or my loan on the property to loan me money? How should I dot it?


Depending upon your credit… I would think you can get 85% max on cashout of the home value, IMO.

Here, I can get 90%+ on a cash-out refi but I’m not going to get screwed with PMI, so I stay at 80% or less…my credit score is high, though…The percentage is based on the new, higher appraisal that is done after I rehab.


Check into Tara grants in your area as well!

You can cash out 100% with an 80/20 using market value and no title seasoning… the rates are ugly. Is it smart? That’s for you to decide.

I can give you a good answer but I would need to know your intention as to what you want to do with this money to see if it makes sense.

1.) Are you planning to refi to get your down payment back?


2.) Are you planning to refi to get more money to invest in other real estate?

Also, one thing you left unclear, are your purchasing this house entirely with your money or do you have to initially finance it? Remember, everytime you finance there’s a cut going to the mortgage broker and the state…

Yes. I would like to refi to get more money to invest in other properties. for the property I have, I used finace.


You may be able to pull cashout on the initial financing. I would try that and if not then I would look at a second loan. That option could be cheaper than paying the points to refinance a first loan. You will have to do the math and decide which one is better financially.

If I understand you correctly you alreay own one property with some equity in it and you want to cash-out to purchase another property. The property you currently own is financed. Correct?

There are some variables to consider, current rate, terms, etc. of loan already in place, but more than likely you are going to be better off if you just finance the new property 100% instead of leveraging your current property.

Have you considered this option? If you have considered this option and are still considering a cash-out refi, what is your reasoning?


Sorry I was not explain clearly. I was going to buy this property, market value around $100,000, and I was able to buy it around $70,000. I wanted to put 20% down (use HELC - $14,000) and 80% finance (about $56,000). After the deal close, I would like to refinace it and take my 20% down out for the next deal? How could I do it? or is it good way to do it in the first place?


You would be paying to much in closing costs…Better off to buy it 100%…save the heloc for your next deal (if necessary).

1). Can you please explain why I would pay too much in closing costs?
2). 100% finance - would you refer to 80/20?


  1. Closing costs on the purchase (Appx. 2,500)
  2. Closing costs on the cash-out refi(Appx. 2,500)
  3. Closing cost on the nex purchase(Appx. 2,500)


  1. Closing costs on the purchase.(Appx. 2,500)
  2. Closing costs on the next purchase.(Appx. 2,500)

Not to mention the fact that the rates are going to be pretty high on a cash out refi…

I got it, Thanks. :slight_smile:

Or you could use a hard money loan that charges no points with a flat $1,000 in fees to acquire the property.

Depending on your credit scores, income, and assets, you could do a cash out refinance up to 100%immediately after you purchase the property. Costs mentioned previously were within reason.