Is a Cash-Out Refinances a Good Idea?

Is a Cash-Out Refinances a Good Idea?

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[tahirisaid]

HELOCs and cash-out refis should ONLY be used as leverage for investing in rental real estate. If you have sufficient equity in your primary residence and you’ve done your due diligence and the numbers work out on a great deal, a HELOC is preferable as you can pay it off when your ARV (After Rehab Value) on the new acquisition is enough to refinance the total debt. Service that debt from the rental revenue and enjoy the residual net cash flow. Then use it again on future acquisitions. This is what I’m doing.

[valoredramack]

I did a Cash Out Refinance because after divorce, it was my best option to buyout my ex-wife from the property without having to sell my home. I didn't have the funds or income to buy her percentage of ownership out of pocket. My interest rate increased from 3.75% to 4.875% after the Cash Out Refinance, but it was worth it to gain sole ownership of my primary residence.

[beastfromtheeast]

I did a cash out refinance. Best decision ever. I used it to pay off credit card debt and my house increased even more in value afterwards the next 4 years. Sold it and took the equity for down payment on a new home.

[miya]

Caller: I wanna buy the Sun

Dave: Okay, what's your monthly income

[TheCaptain]

Dave is so outdated with his logic. I did an cash-out refi on my house and purchased a 3 flat rental property. Now the rental property is paying for itself and my primary home. Best move I ever made.

[lography]

BRRRR real estate investors HATE him because of this one simple trick!

[OIPIO]

I’m my opinion doing a cash out refinance on your primary residence isn’t a great idea, on the other hand doing it on a rental property in order to buy another rental property is not a bad idea (yes I know Dave would not agree 🙄)

[chookchack]

Right. That 2-3 percent is only relevant on a 15-30 yrs mortgage. But paying off in 2 yrs will negate that interest difference bigtime.

[leathelandlady]

You didn't really think Dave was going to tell you to get a mortgage right?

[braceyourselvesfortruth]

Cash-out refi is only bad if you spend that money improperly or if it increases your debt to income ratio to a point where you can't borrow money you need to make more money than the interest rate of the cash amount.

[philmarsh]

The mortgage rates are roughly 2.6%. So where can I find a 2.6% interest rate with no risk again? That's why it can still make sense to pay off a mortgage - even at today's low rates.

[sams]

Dave Ramsey will give people advice that is good for keeping thei money safe. He doesn't give advice on how to grow your money, at least not quickly. The whole debt is bad thing isn't completely true. Debt can be bad if you can't manage it, but he should teach how if you can manage your debt, debt can propel your wealth.

[therook]

Good question since a lot of people are choosing to do refinancing, but mostly do it for student loans

[michaelh]

I am 38 and paid off my home. I will never borrow against it or put it up as collateral for any reason.

When it comes to my home, I don't care about the value or anything of that nature. Just knowing that I have no mortgage payment or risk of foreclosure is a huge weight off our shoulders.

[reversiontothemean]

A lot of silly comments in the wrong channel. Go invest in real estate with debt in another channel and get all the internet accolades you seek. Either way it's nuts to add risk to your primary residence so you get to depend on markets, economy, and tenants. And listen to the entire call, he can have this thing paid off in two years or less if he works at it.

[onyx]

BRRR investors believe you should go into debt in order to control more real estate and do that over and over.

[Cravz]

They forgot to mention whatever income the rental brings, that should accelerate the payoff as well.

[CryptoDad]

Anything that deals with getting into more debt is against Dave Ramsey's principals and teachings. Not sure why people don't understand this?!?!!?!?!?!? DRIVING ME

[sportslad]

Couldn’t disagree more to be honest. Dave’s rules/advice make a lot of sense for people who need to get out of debt. People in debt need to AVOID risk at all costs and get back on their feet. Completely agree. But when you own 1 home and 60% of another home, you’re in a phenomenal position and get to take what we like to call “calculated risk”. The refi would be a very good “calculated risk”. Taking risks isn’t a bad thing, as long as your situation allows for it and you’re not an idiot.

[ashleyrobinson]

i owe $90, 000 on a house estimated for 230600, facing foreclosure, no job. mortgage is 1200 a month.