What is a Cash Out Refinance?
A cash out refinance can be quite beneficial to your financial situation if done correctly. We personally used it to help us with building our rental portfolio!
A cash-out refinance means you’re taking out a new loan worth more than your original mortgage. In general, you can borrow up to 80% of your home’s value, but this amount depends on which lender you use. You would then use the new loan to pay off the original loan, and you would keep the remaining cash leftover to do whatever you want with it.
In our situation, we purchased a distressed property, renovated it and rented it out, and then did a cash out refinance getting a loan for 75% of the value of the home. This allowed us to keep the home as a rental and take out money from the deal.
If you’re looking for support on your financial journey make sure to check out Bankrate’s resources to let you compare today’s refinance rates across different lenders. Bankrate produces award-winning editorial content, product comparison tools, financial calculators, objective reviews - all free resources to help you make better financial decisions.
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