What is a cash-out refi and how can you leverage it to buy real estate?

January 15, 2024

TOPICS: cash at closing, cash-out, home equity, mortgage, real estate investing, Refinance

A cash-out refinance is a financial transaction in which you refinance your existing mortgage for an amount greater than what you currently owe on your home. The difference between the new loan amount and the existing mortgage balance is received in cash at closing. This option allows homeowners to tap into the equity they’ve built in their homes.

Before considering a cash-out refinance, you need to have sufficient equity in your home. Equity is the difference between the current value of your property and the outstanding balance on your mortgage.

The lender will typically require an appraisal of your home to determine its current market value.

If approved, you will receive a new mortgage with terms that include the additional cash you want to take out. Once the refinance is complete, you receive the cash difference between the new loan amount and your existing mortgage balance. You can use this cash for various purposes, including real estate investing.

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