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Explaining cash out refinancing in simple terms

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#shorts #realestate #workfromhome #finance #refinance #mortgage #homeowner #investing #market #home #house #loan #equity #lending #cashoutrefi

Austin Hankwitz

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Of the hundreds of cash out refi videos on YouTube this one wins for being the most clearly explained. Would love to see a part 2 of what you then do with the 28k equity you pulled and how that looks rolling it to another property. Rinse and repeat.

clayhall

Guy who lived through 2008: "I'm getting a crazy case of Deja Vu."

a-izpg

Ok... so... here is my perspective:

Before ReFi:
Assets = Liability + Equity
360K = 260K + 100K

New loan due to ReFi:
Assets = Liability + Equity
648K = 548K + 100K

Where Assets includes 360K house plus 288K of incoming cash from loan. And 588K includes original loan owed plus new loan owed.

Pay off original loan:
Assets = Liability + Equity
388K = 288K + 100K

Where Assets includes 360K house plus 28K of cash remaining from the second loan. And 288K is amt owing on the new loan.

Equity has not changed. Your loan amt is now higher and you have 28K in cash in your bank account to use which you did not have before.

How are you investing the 28K? The income from your investment should hopefully far outweigh the additional cost of the 288K loan.

monsterstream

He already owes banks 260k from his mortgage, and since the bank only ever wants to lend him 288k at a time, he can only get 28k more in pocket before he is lending the full 80% of his house price (my understanding help correct if i am wrong!)

kellansmith

I AM SO GODDAMN CONFUSED!!! I mean, I completely understand everything in the video, it's extremely straightforward. BUT...at the end, he ONLY has $28, 000 in his pocket, and a BIGGER monthly payment. If his house is worth $360, 000, and he owes $260, 000...why wouldn't he just sell that piece of shit(sorry, that's Mr. Jack D. talking), and THEN end up with $100, 000 IN HIS POCKET, AND ZERO MONTHLY
I KNOW there's a good answer, and I'm on pins and needles waiting to hear it ...

williamvoor

Consumers, stop being negative and think as investors, How would you make the money you refi'd for make you money? You INVEST IT BACK. Not refi and show off to your friends at the bars and fancy cars you guys. Also those saying he's not getting his $28, 000... We have similar numbers, we got it.. Went straight to another rental and we are renting it out. Profit and we are not paying out of pockets. Pivot your mindsets and think beyond the standard consumer box you guys.

REVerbtalk

You forgot about inflation its capped at 7% highest ever (2021)

jorgejim

Oh boy, seems like free money, but it sure isn't.

mckaychic

Shouldn't your equity be a little higher if you been paying your mortgage for 3 years?

ironmike

can someone explain where the $28k figure was pulled from? is it a percentage of the 80% figure that the bank gives you? also how exactly does it save 9 years of payments? is he using the $28k in equity he pulled to pay back the loan itself?

xanderemonge

⭐️I Have a Question⭐️🤓I recently acquired a property on seller Finance. The property is free & clear and he agreed to seller finance his home 🏡 to offset his capital gains. The ballon Loan is due in 5 more years. He is due $1mil at the end of the agreed term length. His property will be worth approximately 1.6mil in 5 years. I want to Cash out refinance his property but I don’t understand how it works. At 70%LTV my new loan would be 1.1Mil. If the seller is owed 1 million would my new loan disperse whats due to him and then 100K cash 💰 in my pocket....? 🤔Need help understanding this. Thank you 🙏

lettherebelight

So you get a extra fixed 28k loan that you have to pay (171*12 / 28k)= 14%!!!! interest on each year for the next (171*12*30 -28k) / (171*12)=16.35 years ?!!! Why are people doing this can some on explain it to me

milkbar

But how are you only getting $28, 000 and not the full $288, 000 since the banks lend out 80% of $360, 000

ashtonmurray

So for ppl tht don't understand it he took 9 years off his

collorcha

I don’t get how this is better than selling the house. In the new case you are 288, 000 in debt however you have the house worth 360, 000 and 28, 000 in cash. Let’s say you rent out the house and it pays your debt, you still have only 28, 000 to play with. If you sold the house and pay off the mortgage you make 100, 000 and after all fees let’s say you have 50-60, 000 left. Now you have no debt. But more cash to use.

r____